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EXHIBIT 10.12
CONTRIBUTION AGREEMENT
by and between
▇▇▇▇▇▇ ▇▇▇▇▇▇ GOLF MANAGEMENT LLC,
a Delaware limited liability company
as Seller,
and
APGM LIMITED PARTNERSHIP,
a Delaware limited partnership
as Buyer
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TABLE OF CONTENTS
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ARTICLE PAGE
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1 DEFINITIONS................................................ 1
1.1 Definitions............................................ 1
2 CONTRIBUTION; LEASE-BACK................................... 10
2.1 Contribution........................................... 10
2.2 Property Lease......................................... 11
2.3 Independent Consideration.............................. 11
3 DEPOSIT AND ACQUISITION PRICE.............................. 12
3.1 Acquisition Price...................................... 12
3.2 Determination of Number of Units....................... 12
3.3 Accredited Investors................................... 13
3.4 Prospectus............................................. 13
3.5 Closing Escrow......................................... 14
3.6 Federal Income Tax Consequences of Transaction......... 14
4 TITLE, SURVEY AND SEARCHES................................. 14
4.1 Title.................................................. 14
4.2 Survey................................................. 15
4.3 Searches............................................... 16
5 DUE DILIGENCE.............................................. 16
5.1 Due Diligence Materials................................ 16
5.2 Inspection............................................. 17
5.3 Due Diligence Termination.............................. 18
6 REPRESENTATIONS AND WARRANTIES............................. 18
6.1 Representation and Warranties of Seller................ 18
6.2 Representations and Warranties of Buyer................ 28
6.3 Change In Circumstance................................. 29
7 SELLER'S COVENANTS......................................... 29
7.1 Covenants.............................................. 29
8 CONDITIONS PRECEDENT....................................... 33
8.1 Conditions Precedent to the Obligations of Buyer....... 33
8.2 Conditions Precedent to the Obligations of Seller...... 34
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ARTICLE
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9 DESTRUCTION, DAMAGE OR CONDEMNATION........................ 35
9.1 Destruction or Damage.................................. 35
9.2 Condemnation........................................... 36
10 POSSESSION, PRORATIONS AND CLOSING COSTS................... 36
10.1 Possession............................................ 36
10.2 Prorations............................................ 36
10.3 Closing Costs......................................... 37
11 CLOSING.................................................... 37
11.1 Time and Place........................................ 37
11.2 Seller's Deliveries................................... 38
11.3 Buyer's Deliveries.................................... 40
11.4 Concurrent Deliveries................................. 40
11.5 Concurrent Transactions............................... 41
11.6 New York Style Closing................................ 41
11.7 Employees and Leasing Commissions..................... 41
11.8 Loan Payoff........................................... 41
12 INDEMNIFICATION............................................ 41
12.1 Seller's Indemnity.................................... 41
12.2 Buyer's Indemnity..................................... 42
13 DEFAULT.................................................... 44
13.1 Buyer Default......................................... 44
13.2 Seller Default........................................ 44
14 BROKERAGE.................................................. 45
14.1 Brokerage ......................................... 45
15 NOTICES.................................................... 45
15.1 Notices............................................... 45
16 ADDITIONAL COVENANTS....................................... 46
16.1 Entire Agreement, Amendments and Waivers.............. 46
16.2 Further Assurances.................................... 46
16.3 Survival and Benefit.................................. 46
16.4 No Third Party Benefits............................... 47
16.5 Buyer's Investigation and Inspections................. 47
16.6 Interpretation........................................ 47
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ARTICLE
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16.7 Governing Law....................................... 47
16.8 Attorneys' Fees..................................... 47
16.9 Assignment.......................................... 47
16.10 Intentionally Omitted............................... 47
16.11 Offer and Acceptance................................ 48
17 COMPLIANCE WITH BULK SALES ACTS........................... 48
17.1...................................................... 48
LIST OF EXHIBITS
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EXHIBIT A - Legal Description of Real Property
EXHIBIT B - Due Diligence Materials
EXHIBIT C - Material Contracts
EXHIBIT D-1 - List of Licenses and Permits
EXHIBIT D-2 - Operating Permits
EXHIBIT E - List of Personal Property
EXHIBIT F - List of Members
EXHIBIT G - List of Seller's Environmental Reports and Engineering Reports
EXHIBIT H - Litigation
EXHIBIT I - Assignment of Licenses, Permits and Warranties
EXHIBIT J - ▇▇▇▇ of Sale
EXHIBIT K - Trade Names and Trademarks
EXHIBIT L - Waste Disposal Activities
EXHIBIT M - Property Lease
EXHIBIT N - Wetlands Description
EXHIBIT O - Ground Lease
EXHIBIT P - Ground Lessor Consent and Estoppel
EXHIBIT Q - Loan Documents
EXHIBIT R - Construction Budget
EXHIBIT S - Other Contribution/Conversion Agreements
EXHIBIT T - Condemnation
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CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT is made and entered into as of May 14, 1998,
by and between ▇▇▇▇▇▇ ▇▇▇▇▇▇ GOLF MANAGEMENT LLC, a Delaware limited liability
company ("SELLER"), and APGM LIMITED PARTNERSHIP, a Delaware limited
partnership ("BUYER").
RECITALS
A. Seller is the sole holder of the Ground Leasehold Estate under the
Ground Lease (as such terms are hereinafter defined), and the fee owner of the
Improvements (as hereinafter defined) comprising a thirty-six (36) hole golf
course property commonly known as Memphis National Golf Club, located in
Collierville, Tennessee; and Seller has certain right, title and interest in
and to the Personal Property, the Inventory, the Permitted Contracts, the
Licenses and Permits, the Trade Names and Trademarks and the Warranties (as
such terms are hereinafter defined).
B. Seller and its principals are in the process of sponsoring a real
estate investment trust ("REIT"), the shares of which will be offered to the
public pursuant to an initial public offering (the "IPO") of shares of common
stock ("COMMON STOCK"). As part of the IPO, it is contemplated that (i) the
REIT will become the managing general partner of Buyer, (ii) the limited
partnership interests in Buyer shall be divided into units ("UNITS"), each of
which Units shall have substantially the same economic attributes as a share of
Common Stock in the REIT, and (iii) the holders of Units will have the right to
exchange Units for Common Stock (on a one Unit for one share of Common Stock
basis), subject to the restrictions and limitations which will be established
by an amended and restated partnership agreement of Buyer and the
organizational documents for the REIT which are in effect as of the
consummation of the IPO.
C. In connection with the IPO, Seller desires to sell, assign, transfer or
otherwise contribute, and Buyer desires to acquire, the Property (as
hereinafter defined) upon and subject to the terms and conditions hereinafter
set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Seller and Buyer
agree as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. When used herein, the following terms shall have the
respective meanings set forth opposite each such term:
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(a) ACQUISITION PRICE. As defined in Section 3.1.
(b) AGREED COST OF COMPLETION. The amount $6,439,706.00, being the
total estimated Cost of Completion as of the date hereof.
(c) AGREEMENT. This Contribution Agreement, including the Exhibits
attached hereto which are by this reference incorporated herein and made
a part hereof.
(d) ALLOCABLE TRANSACTION EXPENSES. The portion of the Transaction
Expenses allocable to the Property, determined as of the IPO by
multiplying the Transaction Expenses by the Applicable Percentage.
(e) APPLICABLE PERCENTAGE. The percentage derived by dividing (i)
the Gross Lease Revenue by (ii) the total Rental Income, as stated in the
Statement of Operations Data schedule in the Selected Financial Data
section of the Last Red.
(f) ASSIGNMENT. That certain recordable Assignment of Lessee's
interest in Ground Lease to be delivered to Buyer at Closing, assigning
to Buyer or Buyer's designee all of Seller's right, title and interest
in, to and under the Ground Lease and with respect to the Ground
Leasehold Estate, and containing warranties relative to Seller's right,
title and interest in and to the Ground Leasehold Estate, free and clear
of all liens, claims, encumbrances and restrictions of every kind, nature
and description, subject only to the Permitted Title Exceptions.
(g) BULK SALES LAWS. As defined in Section 17.1.
(h) BUYER INDEMNIFIED PARTIES. As defined in Section 12.1.
(i) BUYER'S INDEMNITY. As defined in Section 5.2.
(j) BUYER'S REPRESENTATIVES. As defined in Section 5.2.
(k) CASH AVAILABLE FOR DISTRIBUTION. As defined in Section 3.2.
(l) CASH ACQUISITION PRICE. As defined in Section 3.1.
(m) CLOSING. The closing of the sale and purchase transaction
contemplated by this Agreement, as described in Article 11 of this
Agreement.
(n) CLOSING DATE. The date of closing determined pursuant to
Section 11.1 of this Agreement.
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(o) CODE. As defined in Section 3.6.
(p) COMMON STOCK. As defined in the Recitals hereto.
(q) CONSTRUCTION ADVANCES. The amount of all advances made by
Seller and/or its affiliates, as of Closing, toward the Cost of
Completion.
(r) CONTINGENCY PERIOD. The period beginning on the Contract Date
and ending at 5:00 p.m., Pacific Time, on the last to occur of (i) the
sixtieth (60th) day following the Contract Date or (ii) the forty-fifth
(45th) day following receipt by Buyer of all Required Due Diligence
Materials. Seller shall certify in writing to Buyer when Seller believes
it has delivered all Required Due Diligence Materials. Within three (3)
business days after receipt of such certification, Buyer shall furnish to
Seller a list of any Required Due Diligence Materials which Buyer has not
received. Seller shall then either deliver such items or certify that
such items are not available. Upon such final delivery or certification,
the forty-five (45) day period shall commence.
(s) CONTRACT DATE. The date Seller delivers to Buyer an original,
fully executed counterpart of this Agreement, which date shall be set
forth in the introductory paragraph of this Agreement.
(t) CONTRACTS. All written or oral: (i) insurance, management,
leasing, service, maintenance, operating, repair, collective bargaining,
employment, employee benefit, severance, franchise, licensing, supply,
purchase, consulting, professional service, advertising, promotion,
public relations and other contracts and commitments in any way relating
to the Property or any part thereof, together with all supplements,
amendments and modifications thereto; and (ii) equipment leases and all
rights and options of Seller thereunder, including rights to renew or
extend the term or purchase the leased equipment, entered into by Seller
or its affiliates, relating to equipment or property located in or upon
the Real Property or used in connection therewith, together with all
supplements, amendments and modifications thereto.
(u) COST OF COMPLETION. The actual total amount of all hard and
soft construction costs to complete construction of certain improvements
currently being made at the Real Property, as generally described in the
construction budget attached hereto as Exhibit R (which costs may
include, without limitation, landscaping, site work, signage,
furnishings, legal costs, insurance, construction and development,
construction coordination fees, professional fees, development fees,
construction period debt service, and construction contingency).
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(v) DEBT SUBJECT TO AMOUNT. The amount which would be required to
pay off the loan evidenced and/or secured by the Loan Documents, in full,
as of the Closing Date and to extinguish the lien of the Loan Documents
at Closing.
(w) DEED. That certain recordable Quit-Claim Deed to be delivered
by Seller to Buyer, or Buyer's nominee, at the closing conveying all of
Seller's right, title and interest in and to the Land and the
Improvements to Buyer subject only to the Permitted Title Exceptions and
the lien or liens created by the Loan Documents.
(x) DUE DILIGENCE APPROVAL DATE. The last day of the Contingency
Period.
(y) DUE DILIGENCE MATERIALS. As defined in Section 5.1.
(z) ENVIRONMENTAL LAWS. All applicable federal, state and local
statutes, regulations, ordinances, judgments, decrees and rules relating
to (i) the emission, discharge, release or threatened release of a
Hazardous Material into the air, surface water, groundwater or land; (ii)
the manufacturing, processing, use, generation, treatment, storage,
disposal, transportation, handling, removal, remediation or investigation
of a Hazardous Material; or (iii) the protection of human health, safety
or the indoor or outdoor environment, including without limitation, the
Clean Air Act, the Federal Water Pollution Control Act, the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act, the Occupational Safety and Health Act,
all amendments thereto, all regulations promulgated thereunder, and their
state or local statutory and regulatory counterparts.
(aa) ESCROWEE. Chicago Title Insurance Company (national office
located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇).
(ab) GROSS LEASE REVENUE. The Initial Base Rent (as defined in the
Property Lease) payable in the first (1st) year of the term of the
Property Lease.
(ac) GROUND LEASE. The ground lease instrument more particularly
described on Exhibit O.
(ad) GROUND LEASEHOLD ESTATE. All of the ground lessee's right,
title and interest in, to and under the Ground Lease (including all
right, title and interest in and to the Real Property and any other
components comprising the Property inuring to the benefit of the ground
lessee under the Ground Lease).
(ae) GROUND LESSOR. ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, ▇.▇., a Tennessee limited
partnership, being the ground lessor under the Ground Lease.
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(af) GROUND LESSOR CONSENT AND ESTOPPEL. As defined in Section
7.1(o).
(ag) HAZARDOUS MATERIAL. Any solid, liquid or gaseous substance,
chemical, compound, product, byproduct, waste or material that is or
becomes regulated, defined or designated by any applicable federal, state
or local governmental authority or by any Environmental Law as hazardous,
extremely hazardous, imminently hazardous, dangerous or toxic, or as a
pollutant or contaminant, and shall include, without limitation, friable
asbestos, asbestos-containing materials, polychlorinated biphenyls, and
oil, petroleum, petroleum products and petroleum byproducts.
(ah) IMPROVEMENTS. Any and all buildings and improvements located
on the Land, including the following:
Clubhouse complex, together with driving range,
practice facilities, paved parking and access areas,
utility improvements and landscaped areas.
Improvements shall include any and all cart paths, tees, greens, holding
ponds, water ▇▇▇▇▇, effluent systems, irrigation lines, drainage
facilities, pump stations, cart barns, entrance signage and pavilions
located on the Land.
(ai) INSPECTIONS. As defined in Section 5.2.
(aj) IPO. As defined in the Recitals hereto.
(ak) IPO CONDITION. As defined in Section 8.3.
(al) IPO PERIOD. As defined in Section 8.3.
(am) INVENTORY. Any and all maintenance facility inventory and all
other inventory of goods owned by Seller and held for resale in
connection with Seller's operation of the subject Property including,
without limitation, golf equipment and golf related goods sold in the pro
shops and food and beverage items sold at the clubhouse facilities and
elsewhere throughout each golf course.
(an) LAND. The land legally described on Exhibit A attached hereto
and incorporated herein by this reference, and generally described as
follows:
Approximately _____ acres of land located in
Collierville, Shelby County, Tennessee.
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(ao) LAST RED. The last preliminary prospectus included as part of
the registration statement filed with the U.S. Securities Exchange
Commission with respect to the IPO which is circulated to investors
generally.
(ap) LEGAL REQUIREMENTS. All laws, statutes, codes, acts,
ordinances, orders, judgments, decrees, injunctions, rules, regulations,
permits, licenses, authorizations, orders, directions and requirements of
all governments and governmental authorities having jurisdiction of the
Property (including, for purposes hereof, any local Board of Fire
Underwriters), and the operation thereof, and all deed restrictions or
other covenants, restrictions, or agreements, site plan approvals, zoning
or subdivision regulations and urban redevelopment plans governing or
regulating the use or operation of the Property.
(aq) LESSEE. Seller, or any wholly owned affiliate of Seller, or
any other affiliate of Seller as may be designated by Seller in a written
notice thereof delivered to Buyer no later than thirty (30) days
following the Contract Date (which other affiliate shall, in any event,
be subject to the reasonable approval of Buyer as more particularly
described in Section 2.2 hereof).
(ar) LESSEE PROPERTY. Collectively, the Inventory, the Membership
Agreements, the Contracts and the Operating Permits.
(as) LICENSE AGREEMENT. That certain License Agreement dated
September 15, 1993 between ▇▇▇▇▇▇ ▇▇▇▇▇▇ Enterprises, Inc., Pacific Golf,
Inc. and ▇▇▇▇▇▇ ▇▇▇▇▇▇ Golf Management Company, as amended by an
Amendment dated May 16, 1996, and as further amended and/or assigned from
time to time.
(at) LICENSES AND PERMITS. All (i) licenses, permits, franchises,
certifications, authorizations, approvals, certificates of occupancy and
entitlements issued, approved or granted by any governmental authority or
body having jurisdiction over the Property and relating to the operation,
ownership or maintenance of the Property or any part thereof; (ii)
development rights in any way related to or used in connection with the
Property and its operations; and (iii) licenses, certifications,
authorizations, approvals, easements and rights of way required from
private parties to make use of utilities and to insure vehicular and
pedestrian ingress and egress to the Real Property; provided that the
term "Licenses and Permits" shall not include Operating Permits.
(au) LOAN DOCUMENTS. All loan agreements, notes, mortgages, deeds
of trust, assignments, guarantees, indemnitees and other instruments
evidencing, securing, guarantying or otherwise relating to any mortgage
or secured financing encumbering the Ground Leasehold Estate and/or
Seller's right, title and interest in and to the Real Property.
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(av) MEMBERSHIP AGREEMENTS. As defined in Section 6.1(h).
(aw) MONETARY LIENS. As defined in Section 4.1.
(ax) MID-POINT PRICE. The mid-point between the high and low
anticipated initial public gross offering price per share for the Common
Stock, as set for in the Last Red.
(ay) OFFERING MULTIPLE. The Mid-Point Price divided by a fraction,
the numerator of which is the Pro Forma Funds From Operations and the
denominator of which is the total number of shares of Common Stock issued
by the REIT and Units issued by Buyer as of the IPO (as shown in the Last
Red under the section entitled "Dilution").
(az) OPERATING PERMITS. All licenses, permits and other
authorizations or approvals granted by any governmental authority or
other body having jurisdiction over the Property which relate solely to
the business operations currently being conducted at the Property (e.g.
liquor licenses, restaurant permits and licenses and health spa licenses)
and which would remain in full force and effect if held by Seller or its
affiliates as the subtenant of the Property pursuant to the Property
Lease.
(ba) OTHER CONTRIBUTION/CONVERSION AGREEMENTS. Those certain
agreements described in Exhibit S hereto.
(bb) PERMITTED TITLE EXCEPTIONS. Those exceptions to title to the
Property approved or deemed approved by Buyer pursuant to Article 4
hereof.
(bc) PERSONAL PROPERTY. All machinery, vehicles, spare parts,
supplies, equipment, fixtures, furnishings and other tangible personal
property of every kind and character (excluding, however, the Inventory)
owned by Seller and situated in or upon or used in connection with the
operation or maintenance of the Real Property or any part thereof, and
all replacements, additions or accessories thereto between the Contract
Date and the Closing Date, and all trademarks and other intangible
personal property of every kind and character owned by Seller and used in
connection with the operation of the subject golf course (except as
otherwise described in the definition of Trade Names and Trademarks
hereinbelow).
(bd) PHASE I STUDY. As defined in Section 5.2.
(be) PRO FORMA FUNDS FROM OPERATIONS. The Pro Forma Funds from
Operations amount set forth in the "Estimated Cash Available for
Distribution" footnote calculation in the Selected Financial Data section
of the Last Red.
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(bf) PROPERTY. Collectively, the Ground Leasehold Estate, the
Personal Property, the Licenses and Permits, the Trade Names and
Trademarks, the Warranties and Seller's interest in and to the balance of
the Real Property and all tangible and intangible assets arising out of or
relating to the foregoing (excluding, however, the Lessee Property
described herein).
(bg) PROPERTY LEASE. As defined in Section 2.2.
(bh) PROSPECTUS. As defined in Section 3.4.
(bi) REAL PROPERTY. The Land and the Improvements, together with
all improvements thereon or therein (including all replacements or
additions thereto between the Contract Date and the Closing Date); all
systems, facilities, fixtures, machinery, equipment and conduits to
provide fire protection, security, heat, exhaust, ventilation,
air-conditioning, electrical power, light, plumbing, refrigeration, gas,
sewer and water to the Land and Improvements (including all replacements
or additions thereto between the Contract Date and the Closing Date); all
privileges, rights (including water rights), easements, hereditaments and
appurtenances thereto belonging; and all right, title and interest of
Seller in and to any streets, alleys, passages and other rights-of-way
included therein or adjacent thereto (before or after any vacation
thereof).
(bj) REIT. As defined in the Recitals hereto.
(bk) REMAINING CONSTRUCTION COST FUNDS. As described in Section
3.2.
(bl) REQUIRED DUE DILIGENCE MATERIALS. The documents and other
materials listed on Exhibit B attached hereto and by this referenced
incorporated herein.
(bm) SEARCHES. As defined in Section 4.3.
(bn) SECURITIES ACT. As defined in Section 3.4.
(bo) SELLER INDEMNIFIED PARTIES. As defined in Section 5.2.
(bp) SELLER'S ENVIRONMENTAL REPORTS. As defined in Section 6.1(s).
(bq) SELLER'S RECEIVABLES. As defined in Section 10.2(b).
(br) STRUCTURAL REPORT. As defined in Section 5.2.
(bs) SURVEY. A current as-built survey of the Land prepared by a
surveyor licensed by the state in which the Land is located and certified
to Buyer, the Title
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Company and such other parties as Buyer shall designate to be prepared in
accordance with the current Minimum Standard Detail Requirements for Land
Title Surveys (excluding the requirement for the placement of monuments)
adopted by the American Land Title Association and American Congress on
Surveying and Mapping, setting forth the legal description and street
address of the Land and Improvements and specifically showing thereon all
buildings, and other improvements (including fences, tees, fairways,
greens, traps, cart paths, pumping facilities, holding ponds and golf
course facilities), the number of stories in such buildings, easements
(visible or recorded), building lines, curb cuts, party walls (if any),
parking, sewage, water, electricity, gas and other utility facilities
(together with recording information concerning the documents creating
any such easements and building lines), roads and means of physical and
record ingress and egress to and from the Real Property by public roads
and the gross area of the land included in the Land, and spotting
improvements on adjoining property which are within five (5) feet of the
property lines of the Land. The Survey shall specify and depict ponds,
creeks, streams and rivers and any areas of the Land which are located in
a flood plain, wetlands or other environmentally controlled, regulated or
protected area.
(bt) TITLE COMMITMENT. A commitment for the Title Policy covering
the Land and Improvements issued by the Title Company in favor of Buyer,
or its nominee, in the full amount of the Acquisition Price, showing
Ground Lessor as fee simple title holder of the Land and showing Seller
as the holder of the Ground Leasehold Estate.
(bu) TITLE COMPANY. Chicago Title Insurance Company (national
office, located in Chicago, Illinois).
(bv) TITLE POLICY. An ALTA Leasehold Title Insurance Policy
covering the Land and Improvements issued by the Title Company pursuant
to the Title Commitment, insuring Buyer as the holder of the Ground
Leasehold Estate, specifically containing "extended coverage" insuring
over all general exceptions raised in such form of title policy and
containing the following endorsements (if issued in the jurisdiction of
the Real Property): zoning 3.1, owner's comprehensive, encroachment,
contiguity (if applicable), access, survey, tax parcel, subdivision
compliance, and creditor's rights.
(bw) TRADE NAMES AND TRADEMARKS. All of Seller's rights in and to
the trade names, trademarks, service marks and logos set forth and
described on Exhibit K attached hereto and incorporated herein by
reference, and any and all derivatives and forms thereof, together with
all other trade names, trademarks, service marks and logos, whether or
not registered, pertaining to the current operation of the Real Property,
but specifically excluding any and all trade names, trademarks, service
marks and/or logos inuring to Seller's benefit pursuant to the License
Agreement (which intangibles derived pursuant to the License Agreement
shall remain the property of Seller).
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(bx) TRANSACTION EXPENSES. The costs, expenses and fees (exclusive
of underwriters' fees) incurred by Seller, Buyer and/or the REIT directly
or indirectly relating to the planning and formation of the Buyer, the
REIT and other entities required to effect the IPO, as set forth in the
"Proceeds to Company" footnote on the cover page of the Last Red.
Transaction Expenses shall not include any costs, expenses and fees that
are to be borne specifically by Seller or Buyer, as the case may be,
pursuant to express provisions of this Agreement.
(by) UNITS. As defined in the Recitals hereto.
(bz) WARRANTIES. All guarantees and warranties in effect with
respect to the Property or any portion thereof, which, by their terms,
shall survive Closing, including, without limitation, all guarantees and
warranties of contractors, materialmen, manufacturers, mechanics or
suppliers who have been engaged by Seller or any of its agents to furnish
labor, materials, equipment or supplies to all or any portion of the
Property.
ARTICLE 2
CONTRIBUTION; LEASE-BACK
2.1 CONTRIBUTION. Subject to the conditions and on the terms contained in
this Agreement:
(a) Buyer agrees to acquire from Seller, and Seller agrees to sell,
assign, transfer or otherwise contribute to Buyer, all of Seller's right,
title and interest in, to and under the Ground Lease and with respect to
the Ground Leasehold Estate, free and clear of all liens, claims,
encumbrances and restrictions of every kind and description, except for
Permitted Title Exceptions and liens created by the Loan Documents, which
assignment shall be made by the Assignment.
(b) Buyer agrees to acquire from Seller, and Seller agrees to sell,
assign, transfer or otherwise contribute to Buyer, (i) all of Seller's
right, title and interest in the Land and Improvements by the Deed, and
(ii) all of Seller's right, title and interest in the balance of the Real
Property.
(c) Buyer agrees to acquire from Seller, and Seller agrees to sell,
assign, convey, transfer or otherwise contribute to Buyer, all of
Seller's right, title and interest in and to the following items, free
and clear of all liens, claims, encumbrances and restrictions of every
kind and description, except for Permitted Title Exceptions and liens
created by the Loan Documents: (i) the Licenses and Permits, and (ii) the
Warranties.
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(d) Buyer agrees to purchase and acquire from Seller, and Seller
agrees to sell, convey, assign, transfer or otherwise contribute to Buyer,
(i) the Personal Property, (excluding, however, the Inventory, which is
hereby acknowledged not to be part of the Property being conveyed
hereunder), and (ii) the Trade Names and Trademarks, by good and
sufficient ▇▇▇▇ of sale containing full warranties of title free and clear
of liens, claims, encumbrances and restrictions of every kind and
description, except the Permitted Title Exceptions and liens created by
the Loan Documents.
(e) Nothing herein shall be deemed to be an agreement of Buyer to
engage, or otherwise be responsible for, any employees of Seller, (it
being understood that Buyer's acquisition of the Property hereunder shall
not be deemed an acquisition of any of Seller's business operations
currently being conducted at the Real Property), which business
operations shall continue to be conducted by the Lessee pursuant to the
terms of the Property Lease described in Section 2.2 below. Moreover,
except as specifically provided herein to the contrary, Buyer shall not
assume, or become obligated with respect to, any liability or obligation
of Seller.
2.2 PROPERTY LEASE. Notwithstanding anything herein to the contrary, it
is understood and agreed that Buyer (or any affiliate thereof acquiring the
Property hereunder at Closing), as lessor, and Lessee, as lessee, shall be
entering into a sublease for the Property (the "PROPERTY LEASE") commencing upon
the Closing Date, in substantially the form attached hereto as Exhibit M. In the
event Seller desires an entity other than Seller or a wholly owned affiliate of
Seller to be the "Lessee" under the Property Lease, Seller shall deliver notice
to Buyer, within thirty (30) days following the Contract Date, identifying the
entity which it proposes to be the lessee under the Property Lease, and Seller
shall thereafter deliver to Buyer such other information concerning such
proposed lessee as Buyer may request. Buyer shall have the right to approve any
entity designated by Seller (other than a wholly owned affiliate of Seller) to
be the lessee under the Property Lease, which approval shall not be unreasonably
withheld. Upon such approval (or, in case of any wholly owned affiliate of
Seller, where no approval of Buyer shall be required), the entity so designated
shall be the "Lessee" under the Property Lease being entered into at Closing,
and, at Closing, Seller shall convey all of its right, title and interest in and
to the Lessee Property to said Lessee by assignment or other conveyance
documents acceptable to Buyer and Buyer's counsel. If Buyer does not so approve
the proposed entity as lessee under the Property Lease, then Seller or a wholly
owned affiliate of Seller (as designated by Seller) shall be the "Lessee"
thereunder.
2.3 INDEPENDENT CONSIDERATION. Concurrently with and in consideration for
the acceptance of this Agreement by Seller, Buyer has paid to Seller a
nonrefundable fee of ONE HUNDRED and NO/100 DOLLARS ($100.00). In the event
that this Agreement is determined to be unenforceable or void as a mutually
binding contract by reason of the existence of any condition, the indefiniteness
of any provision, the lack of mutuality or any approval or election of Buyer
with respect to any contingency or other matter, then such fee shall be
considered
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adequate consideration for, and this Agreement shall be construed as, an option
to purchase enforceable in accordance with the terms set forth herein.
ARTICLE 3
DEPOSIT AND ACQUISITION PRICE
3.1 ACQUISITION PRICE. The purchase price to be paid by Buyer in
consideration for the contribution of the Property (the "ACQUISITION PRICE")
shall be $0.00 (payable at Closing in cash, or by cashier's check or wire
transfer of funds) (herein, the "CASH ACQUISITION PRICE"), together with that
number of Units determined as set forth in Section 3.2 below.
3.2 DETERMINATION OF NUMBER OF UNITS. The actual number of Units to be
delivered as the Acquisition Price shall be determined as follows:
(a) First, the Pro Forma Funds from Operation shall be multiplied by
the Applicable Percentage;
(b) Second, the product resulting from (a) above shall be multiplied
by the Offering Multiple;
(c) Third, the product resulting from (b) above shall be multiplied
by 0.93;
(d) Fourth, the amount resulting from (c) above shall be reduced by
the following amounts:
(i) the Allocable Transaction Expenses; and
(ii) the Debt Subject to Amount, calculated as of the
date of the Last Red*; and
(iii) the excess of the Agreed Cost of Completion over
the Construction Advances (the "REMAINING
CONSTRUCTION COST FUNDS"), calculated as of the
date of the Last Red*;
[* The difference between the amounts described in (d)(ii)
and (d)(iii) above and the actual Debt Subject to Amount
and Remaining Construction Cost Funds (as the case may
be) existing at Closing shall be adjusted between Seller
and Buyer, in cash, as a proration item at Closing.]
(e) Fifth, the amount resulting from (d) above shall be reduced by
the Cash Acquisition Price which is to be paid to Seller as part of the
Acquisition Price;
(f) Sixth, the amount resulting from (e) above shall be divided by
.93; and
(g) Seventh, the amount resulting from (f) shall be divided by the
Mid-Point Price.
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3.3 ACCREDITED INVESTORS. Seller acknowledges that Buyer is paying a
portion of the Acquisition Price by the issuance of Units in a sale exempt from
registration under the Securities Act (as defined in Section 3.4 below) and that
the issuance of said Units is based upon the representations and warranties of
Seller contained herein, and in the Investor Questionnaire and the Power of
Attorney and Acknowledgement heretofore executed by Seller and delivered to
Buyer. Seller acknowledges and confirms that (i) Seller has consulted with its
counsel with respect to Rule 145 and Rule 501 promulgated under the Securities
Act and such other rules and regulations promulgated under the Securities Act
applicable to the transactions contemplated by this Agreement, including, but
not limited to, the issuance of Units for the Seller, (ii) the members of Seller
have not adopted resolutions to and otherwise do not intend to dissolve Seller
or otherwise distribute Units to the members of Seller, and (iii) there is no
preexisting plan, agreement or understanding for dissolution of Seller or
distribution of the Units by Seller. Seller agrees not to adopt any resolution,
agreement or plan within one year after the date of Seller's receipt of Units
under this Agreement which would result in the distribution of Units to the
members of Seller, and Seller further agrees to take no other action that will
cause the sale of the Units by Buyer to Seller pursuant to this Agreement to be
deemed a sale of securities to any direct or indirect members of Seller. Seller
hereby represents and warrants that (a) Seller is an accredited investor as
defined in Rule 501(a) promulgated under the Securities Act, (b) Seller is a
limited liability company not formed for the specific purpose of acquiring the
Units within the meaning of Rule 501(a)(3) and (c) Seller has total assets as of
the date hereof in excess of $5,000,000.
3.4 PROSPECTUS. Seller understands that in connection with the IPO, Buyer
will require certain information in order to comply with the Securities Act of
1933, as amended, the regulations promulgated thereunder, and any applicable
states' securities laws governing the offering and sales of securities
(collectively, the "SECURITIES ACT"), and such information will be used in the
preparation of and/or included in a prospectus (the "PROSPECTUS") to be
distributed in connection with the sale of the Common Stock of the REIT.
Seller agrees to provide to Buyer, at Buyer's sole cost and expense (unless
otherwise specified in this Agreement), all information which Buyer, the
underwriters of the IPO and their respective attorneys or accountants deem
necessary or desirable to prepare the Prospectus. Within ten (10) days after
request therefore by Buyer, Seller shall, from time to time, update and
recertify any information previously provided by Seller pursuant hereto.
Seller agrees to carefully review the portions of the Prospectus concerning the
Property to verify that such portions of the Prospectus do not contain any
untrue statement of material fact and do not omit to state a material fact
necessary in order to make the statements made in such portions of the
Prospectus, in light of the circumstances under which they were made, not
misleading. If Seller finds any portion of the Prospectus relating to the
Property inaccurate, Seller shall promptly notify Buyer in detail in writing as
to the reasons it finds such portions of the Prospectus inaccurate so that the
Prospectus may be modified. This Agreement is not intended to constitute an
offering of securities under the Securities Act or otherwise, and no securities
have been offered to Seller by virtue hereof.
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3.5 CLOSING ESCROW. On or prior to the Closing Date, the parties shall
establish an escrow trust with the Escrowee through which the transaction
contemplated hereby shall be closed. The escrow instructions shall be in the
form customarily used by the Escrowee with such special provisions added
thereto as may be required to conform to the provisions of this Agreement.
Said escrow shall be auxiliary to this Agreement and this Agreement shall not
be merged into nor in any manner superseded by said escrow. The escrow costs
and fees for each of the escrow accounts described in this Article 3 shall be
equally divided between Buyer and Seller.
3.6 FEDERAL INCOME TAX CONSEQUENCES OF TRANSACTION. Each of Buyer and
Seller hereby acknowledge and agree that, notwithstanding anything contained in
this Agreement to the contrary, the transfer of the Property shall be treated
for federal income tax purposes (i) with respect to that portion of the
Acquisition Price paid in the form of Units under Section 3.2 hereof, as a
partial contribution of the Property to the Buyer under Section 721 of the
Internal Revenue Code of 1986, as amended (the "CODE"), and the Treasury
Regulations promulgated thereunder, and (ii) with respect to that portion of
the Acquisition Price constituting the "Cash Acquisition Price" under Section
3.1 above, as a sale of a portion of the Property to Buyer. As a result, the
transaction will be treated for federal income tax purposes as a part
contribution/part sale of the Property under Code Section 707 and the Treasury
Regulations promulgated thereunder.
3.7 COSTS OF COMPLETION. Pursuant to the Property Lease, the Lessee shall
be responsible, after Closing, for completion of construction of those
improvements currently in process at the Real Property as generally described
in the construction budget attached hereto as Exhibit R. Buyer shall make
available to Lessee, from time to time, undisbursed portions of the Remaining
Construction Cost Funds, in order to reimburse Lessee for the ongoing Cost of
Completion, all as set forth in the Property Lease. In the event the Cost of
Completion (as determined by Lessee and confirmed by Buyer) is less than the
Agreed Cost of Completion, Buyer shall pay the balance of the undisbursed
Remaining Construction Cost Funds to Lessee within sixty (60) days after the
Lessee's written request therefor and delivery to Buyer of supporting
documentation reasonably satisfactory to Buyer, all as more fully described in
the Property Lease.
ARTICLE 4
TITLE, SURVEY AND SEARCHES
4.1 TITLE. Following the Contract Date, Buyer shall order and obtain the
Title Commitment, together with a copy of each recorded document raised as an
exception therein. If the Title Commitment raises any exceptions to title to
which Buyer objects, in its sole and absolute discretion, Buyer shall give
Seller notice of such objection prior to the Due Diligence Approval Date, and
Seller shall thereafter have the right to have such unpermitted exceptions
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so objected to by Buyer removed from the Title Commitment or insured over by
the Title Company to the reasonable satisfaction of Buyer, and to provide
evidence thereof to Buyer. Notwithstanding the foregoing, any delinquent real
property taxes, deeds of trust, mortgages, unpaid obligations owing to any
governmental agency which, with the passage of time, could give rise to a lien,
mechanic's liens, attachment liens, execution liens, tax liens for delinquent
taxes and judgment liens (collectively, "MONETARY LIENS"), disclosed on the
Title Commitment shall be automatically deemed unpermitted exceptions and
objected to by Buyer without any further action or notice thereof to Seller.
For the purposes of this Agreement, any liens created by the Loan Documents
shall be deemed accepted by Buyer. If Seller fails to have all unpermitted
exceptions removed from the Title Commitment or insured over to the reasonable
satisfaction of Buyer on or before the Due Diligence Approval Date or,
alternatively, confirm in writing to Buyer that Seller will remove or insure
over any such unpermitted exceptions on or prior to the Closing Date, Buyer may
elect, by written notice delivered to Seller on or before the Due Diligence
Approval Date, to (i) terminate this Agreement, in which event all obligations
of the parties hereunder shall terminate (other than Buyer's Indemnity which
shall survive such termination for the period specified in Section 5.2 hereof),
and this Agreement shall otherwise have no further force and effect, or (ii)
accept title to the Property subject to such unpermitted exceptions, all of
which shall thereafter be deemed "Permitted Title Exceptions," with the further
right to deduct from the Acquisition Price amounts secured by or constituting
unpermitted liens or encumbrances of a definite or ascertainable amount
(including, without limitation, any and all Monetary Liens), and/or to cause
the Title Company to issue endorsement(s) insuring against damage caused by
such exceptions and deduct from the Acquisition Price the cost of the premiums
and security provided for said endorsement, as the case may be. Buyer's
failure to make either election on or before the Due Diligence Approval Date
shall be deemed an election under clause (ii) above. On the Closing Date,
Seller shall cause the Title Company to issue the Title Policy (or a
"marked-up" title commitment unconditionally committing the Title Company to
issue such Title Policy) to Buyer, pursuant to and in accordance with the Title
Commitment, insuring the Ground Leasehold Estate in Buyer as of the Closing
Date, subject only to the Permitted Title Exceptions and such other exceptions
as Buyer may approve pursuant to clause (ii) above.
4.2 SURVEY. No later than twenty-one (21) days following the Contract
Date, Seller shall obtain and deliver the Survey to Buyer. If the Survey
discloses any encroachments onto the Land from any adjacent property,
encroachments by or from the Land onto any adjacent property, violations of or
encroachments upon any recorded building lines, restrictions or easements
affecting the Land, matters including possible rights of third parties, or any
other matter to which Buyer objects, in its sole and absolute discretion, Buyer
shall give Seller notice of such objection prior to the expiration of the
Contingency Period, and Seller shall thereafter have the right to have such
encroachments, violations, restrictions, easements or other matters so objected
to by Buyer removed from the Survey or insured over by the Title Company to the
reasonable satisfaction of Buyer, and to provide evidence thereof to Buyer. If
Seller fails to have same so removed or insured over, on or before the Due
Diligence Approval Date, Buyer
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may elect, by written notice delivered to Seller on or before Due Diligence
Approval Date, to (i) terminate this Agreement, in which event all obligations
of the parties hereunder shall terminate (other than Buyer's Indemnity, which
shall survive such termination for the period of time specified in Section 5.2
hereof), and this Agreement shall otherwise have no further force and effect,
or (ii) accept the Property subject to such encroachments, violations,
restrictions, easements and other matters, all of which shall thereafter be
deemed Permitted Title Exceptions for purposes hereof. Buyer's failure to make
such election on or before the Due Diligence Approval Date shall be deemed an
election under clause (ii) above.
4.3 SEARCHES. Following the Contract Date, Buyer may obtain, at Seller's
sole expense (to be paid by Seller upon Buyer's demand therefor), searches of
the records of the county recorders, secretaries of state and district courts
of the jurisdictions in which the Land is located (collectively, the
"SEARCHES") confirming the absence of security interests, judgments, tax liens
for delinquent taxes and bankruptcy proceedings which affect or could affect
the Property or any interest therein to be transferred to Buyer pursuant to
this Agreement (except for the Permitted Title Exceptions). If said searches
disclose the existence of any security interests, judgments, tax liens for
delinquent taxes or bankruptcy proceedings which, in Buyer's sole judgment,
affect or could affect Seller's interest in the Property, Buyer shall give
Seller notice thereof prior to the expiration of the Contingency Period, and
Seller shall thereafter have the right to secure the release, satisfaction or
termination (as appropriate) of same and provide evidence thereof to Buyer on
or before the Closing Date. If Seller fails to secure such release,
satisfaction or termination (as appropriate) on or before the Closing Date,
Buyer may elect, by written notice delivered to Seller on or before the Closing
Date, to (i) terminate this Agreement, in which event all obligations of the
parties hereunder shall terminate (other than Buyer's Indemnity which shall
survive such termination for the period specified in Section 5.2 hereof), and
this Agreement shall have no further force and effect, or (ii) accept title to
the Property subject to such unpermitted exceptions, all of which shall
thereafter be deemed Permitted Title Exceptions, with the further right to
deduct from the Acquisition Price amounts secured by or constituting Monetary
Liens. Buyer's failure to make either such election on or before Due Diligence
Approval Date shall be deemed an election under clause (ii) above. Said
searches may be updated, at Buyer's sole cost and expense, as of the Closing
Date confirming the absence (i) of the security interests, judgments, tax liens
for delinquent taxes or bankruptcy proceedings objected to by Buyer hereunder,
and (ii) any additional security interests, judgments, tax liens for delinquent
taxes and bankruptcy proceedings.
ARTICLE 5
DUE DILIGENCE
5.1 DUE DILIGENCE MATERIALS. On or before Closing, and promptly following
Buyer's request therefor, Seller shall use all good faith and commercially
reasonable efforts to secure and furnish to Buyer such due diligence items as
may be required by, and in form and substance
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satisfactory to, Buyer and Buyer's counsel. Without limitation of the
foregoing, Seller shall use all good faith and commercially reasonable efforts
to secure and furnish to Buyer, no later than fifteen (15) days after the
Contract Date, to the extent not previously delivered to Buyer, true, correct
and complete copies of the Required Due Diligence Materials described in
Exhibit B hereto (the Required Due Diligence Materials, together with any other
items furnished to Buyer under this Section 5.1, being collectively referred to
herein as the "DUE DILIGENCE MATERIALS").
5.2 INSPECTION. For the period commencing with the date of the Contract
Date and continuing through the Closing Date or earlier termination of this
Agreement, Seller shall permit Buyer and any of its officers, employees, agents,
attorneys, accountants, appraisers, architects, engineers, consultants, lenders
or other representatives as designated by Buyer (collectively, "BUYER'S
REPRESENTATIVES") access to Seller's books and records relating to the ownership
and operation of the Property and access to and entry upon the Real Property, to
examine, inspect, measure and test the Property and to conduct such financial
audits and verifications as they shall deem reasonably necessary (herein
collectively, the "INSPECTIONS"). Seller shall cooperate with Buyer and Buyer's
Representatives in conducting the foregoing activities. Without limitation of
the foregoing, it is acknowledged that Buyer and Buyer's Representatives shall
have the right to conduct financial audits with respect to Seller's operations
at the Property for Seller's most recent three (3) full fiscal years (if
applicable), as well as with regard to Seller's current fiscal year operations,
and Seller shall give customary representations and warranties to Buyer's
accountants with respect to financial matters as may reasonably be requested by
said accountants. Seller hereby consents to Buyer or Buyer's Representatives
(i) conducting a Phase I environmental site assessment of the Property (the
"PHASE I STUDY"), and (ii) conducting or obtaining an engineer's structural
report respecting the Improvements (the "STRUCTURAL REPORT"). The costs of
conducting and obtaining the Phase I Study and the Structural Report shall be
the responsibility of Buyer. In the event any of Buyer's Representatives
recommends additional environmental review after conducting the Phase I Study,
Seller shall permit Buyer and Buyer's Representatives access to and entry upon
the Real Property for such additional review; provided, however, that no
invasive inspection shall be performed without Seller's prior written consent
(which consent shall not be unreasonably withheld or delayed). Buyer shall give
not less than twenty-four (24) hours' prior written or oral notice to Seller
prior to any entry upon the Land or Improvements for the purpose of conducting
such Inspections and such entry shall be scheduled and coordinated with Seller.
At Seller's election, a representative of Seller shall be present during any
entry by Buyer or Buyer's Representative upon the Property for conducting said
Inspections. Buyer shall not cause or permit any mechanic's liens,
materialmen's liens or other liens to be filed against the Property as a result
of the Inspections. Buyer shall repair and restore any damage to the Property
caused by entry upon the Land or Improvements by Buyer or the other Buyer's
Representatives, except to the extent Seller's negligence or willful acts
contributed to such damage. Buyer shall indemnify, defend and hold harmless
Seller and Seller's officers, directors, shareholders, partners, tenants, agents
and employees (collectively, the "SELLER INDEMNIFIED PARTIES"), from and against
any and all actions, losses, costs, damages, claims, liabilities, and expenses
(including court costs and reasonable attorney's fees) brought,
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sought or incurred by or against any of the Seller Indemnified Parties
resulting from, arising out of, or relating to, entry upon the Land or
Improvements by Buyer or any of the other Buyer's Representatives, except to
the extent Seller's negligence or willful acts contributed to same. The
foregoing indemnification and repair and restoration obligations (herein
collectively referred to as "BUYER'S INDEMNITY") shall expressly survive the
termination of this Agreement; provided, however, that any claim by Seller for
recovery under Buyer's Indemnity shall be made in writing within one hundred
eighty (180) days after the termination of this Agreement or shall thereupon be
forever waived.
5.3 DUE DILIGENCE TERMINATION. In addition to Buyer's right to approve
the Title Commitment, the Survey and the Searches, as described in Article 4
hereof, the obligation of Buyer to close the transaction contemplated hereby is
subject to Buyer's review of, approval of and satisfaction with, at its sole
cost and expense, on or before the Due Diligence Approval Date, the Due
Diligence Materials, the Title Commitment, the Survey, the results of the
Inspections and all other matters respecting the Property. If Buyer, in its
sole and absolute discretion, is not satisfied with any of the foregoing, then
Buyer shall have the right to terminate this Agreement by delivery to Seller of
written notice thereof delivered at any time prior to 5:00 p.m., Pacific Time,
on the Due Diligence Approval Date, in which event this Agreement shall become
null and void and neither party shall have any further rights and obligations
hereunder (subject, however, to survival of Buyer's Indemnity for the period
specified in Section 5.2). Buyer's failure to timely deliver its termination
notice as provided in this Section 5.3 shall be deemed a waiver of Buyer's
contingencies described in this Section 5.3, whereupon the parties shall
proceed to close the transaction contemplated by this Agreement as provided
herein.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
6.1 REPRESENTATION AND WARRANTIES OF SELLER. To induce Buyer to execute,
deliver and perform this Agreement, Seller hereby represents and warrants to
Buyer on and as of the Contract Date and, by an update certificate to be
delivered at closing, on and as of the Closing Date, as follows:
(a) OTHER REPRESENTATIONS AND WARRANTIES. All representations and
warranties of Seller appearing in other Sections of this Agreement are
true and correct in all material respects as of the date hereof, and
shall be true and correct in all material respects as of the Closing
Date, except to the extent any such representation or warranty expressly
relates to a specific date, in which case it is and shall be true and
correct in all material respects as of such specific date.
(b) DUE DILIGENCE MATERIALS; EXHIBITS. The information included in
the Exhibits hereto and the documents delivered to Buyer pursuant to
Section 5.1 are, to
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Seller's knowledge, true, correct and complete in all material respects,
and to Seller's knowledge, the same do not omit any material information
required to make the submission thereof fair and complete.
(c) AUTHORITY. Seller is a duly organized and validly existing
limited liability company in good standing under the laws of the State of
Delaware and under the laws of the State where the Real Property is
located. Seller has full capacity, right, power and authority to
execute, deliver and perform this Agreement and all documents to be
executed by Seller pursuant hereto, and all required action and approvals
therefor have been duly taken and obtained. The individuals signing this
Agreement and all other documents executed or to be executed pursuant
hereto on behalf of Seller are and shall be duly authorized to sign the
same on Seller's behalf and to bind Seller thereto. This Agreement and
all documents to be executed pursuant hereto by Seller are and shall be
binding upon and enforceable against Seller in accordance with their
respective terms.
(d) CONTRACTS. Attached as Exhibit C to this Agreement and
incorporated herein by this reference is a true, correct and complete
schedule of all material Contracts (i.e., meaning Contracts which have
projected or actual payment obligations in excess of $25,000.00 during
any quarterly period or which are otherwise material to the business
operations currently being conducted at the Real Property). To Seller's
knowledge, there are no defaults under any of the Contracts and all of
the Contracts are in good standing and in full force and effect. Seller
shall retain (or assign to any other entity which becomes the Lessee
under the Property Lease) all rights and obligations under the Contracts
following the Closing, as the continued operator of the business being
conducted at the Property pursuant to the Property Lease, and there are
no Contracts which will be binding, or impose any obligation, upon Buyer
after Closing.
(e) LICENSES AND PERMITS. Attached as Exhibit D-1 to this Agreement
and incorporated herein by this reference is a true, correct and complete
list of all material Licenses and Permits. To Seller's knowledge, Seller
currently possesses all Licenses and Permits necessary and required for
the current ownership, use and maintenance the Real Property and each of
the Licenses and Permits is in full force and effect and in good standing
and Seller has not received notice of any intention on the part of the
issuing authority to cancel, suspend or modify any of the Licenses and
Permits or to take any action or institute any proceedings to effect such
a cancellation, suspension or modification. To Seller's knowledge, no
notice to, filing or registration with, or License or Permit from, any
governmental or regulatory body or authority, or any other person or
entity is required to be made or obtained in connection with the
execution, delivery or performance of this Agreement by Seller. The
interest of Seller in the Licenses and Permits has not been assigned to
any other person and is, to Seller's knowledge, free and clear of all
encumbrances other than liens granted under the Loan Documents.
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(f) OPERATING PERMITS. Attached as Exhibit D-2 to this Agreement and
incorporated herein by this reference is a true, correct and complete list
of all material Operating Permits. To Seller's knowledge, Seller
currently possesses all Operating Permits necessary and required for the
lawful operation of Seller's business at the Real Property and each of the
Operating Permits is in full force and effect and in good standing and
Seller has not received notice of any intention on the part of the issuing
authority to cancel, suspend or modify any of the Operating Permits or to
take any action or institute any proceedings to effect such a
cancellation, suspension or modification. To Seller's knowledge, no
notice to, filing or registration with, or License or Permit from, any
governmental or regulatory body or authority, or any other person or
entity is required to be made or obtained in connection with the
execution, delivery or performance of this Agreement by Seller. The
interest of Seller in the Operating Permits has not been assigned to any
other person and is, to Seller's knowledge, free and clear of all
encumbrances other than liens granted under the Loan Documents.
(g) PERSONAL PROPERTY. Attached as Exhibit E to this Agreement and
incorporated herein by this reference is a true, correct and complete
schedule of the Personal Property. Seller has good and marketable title
to the Personal Property and each item thereof free and clear of liens,
security interests, encumbrances, leases and restrictions of every kind
and description, except as disclosed on Exhibit E and except for the Loan
Documents. The Personal Property is in good operating condition and
repair, ordinary wear and tear excepted.
(h) MEMBERSHIP. Attached as Exhibit F to this Agreement and
incorporated herein by this reference are true, correct and complete
lists of all of the members of any type of respective golf courses
comprising the Property. This exhibit describes all classes of
memberships and all persons with any membership rights, including,
without limitation, honorary and lifetime members and persons holding
first offer and refusal rights. Except as may be disclosed in the
membership agreements ("MEMBERSHIP AGREEMENTS") and other membership
materials furnished to Buyer pursuant to Section 5.1, Seller has made no
written or oral representations, covenants or agreements (including any
rules, regulations or by-laws relating to membership or any
correspondence delivered to members or prospective members), concerning
(i) the total allowable number of members or classes of membership in the
clubs; (ii) qualifications or approval required for new members, (iii)
the amount of initiation fees, deposits, restrictions or waiver of
monthly dues or other fees to be charged to the membership for their
usage of the clubs, or (iv) rights of members of the clubs.
(i) VIOLATIONS OF LAWS. To Seller's knowledge, the Improvements
have been constructed and are presently used and operated in material
compliance with all Licenses and Permits and Operating Permits, all Legal
Requirements and all covenants, easements and restrictions affecting the
Property and Seller has received no written notices of any
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violations of any Legal Requirements pertaining to the Property which
have not been corrected in all material respects.
(j) CONDITION OF PROPERTY. Attached as Exhibit G to this Agreement
is a list of all reports, assessments and investigations commissioned by
Seller or within Seller's possession or control relating to the physical
condition of the Improvements and the condition of soils at the Land, and
Seller has delivered to Buyer (or will deliver to Buyer as part of the
Required Due Diligence Materials) true, correct and complete copies
thereof. To Seller's knowledge, the Improvements are structurally sound,
weather tight and in good condition and repair. To Seller's knowledge,
there are no structural defects in any of the Improvements. To Seller's
knowledge, the soil condition of the Land is such that it will support
all of the Improvements without need for additional subsurface
excavations, fill, footings, caissons or other installations.
(k) LITIGATION. Except as set forth on Exhibit H to this Agreement
and incorporated herein by this reference, Seller has not been served
with notice of any action, order, writ, injunction, judgment or decree
outstanding, or of any claims, causes of action or other litigation or
proceeding pending, nor, to the best of Seller's knowledge, are any such
matters threatened, with respect to (i) the ownership or operation of the
Property or any part thereof (including, without limitation, disputes
with mortgagees, governmental authorities, utilities, contractors,
adjoining land owners or suppliers of goods or services) or (ii) Seller's
ability to consummate the transactions contemplated hereby.
(l) CONDEMNATION. Except as described in Exhibit T hereto, there is
no pending (i) condemnation of any part of the Real Property or, (ii)
widening, change of grade or limitation on use of streets abutting the
Real Property, and, to the best of Seller's knowledge, there is no
contemplated, threatened or anticipated (i) condemnation of any part of
the Real Property, (ii) widening, change of grade or limitation on use of
streets abutting the Real Property or (iii) change in the zoning
classification of the Real Property.
(m) ASSESSMENTS. Seller has received no notice and has no knowledge
of any pending liens, special taxes or assessments to be made against the
Property by any governmental agency or authority, nor has Seller received
notice of any planned change in the tax assessment or assessed valuation
of the Real Property. To the best of Seller's knowledge, there are no
other special taxes or special assessments levied against Seller or the
Property arising out of the specific use of the Property for operation as
a golf course (as opposed to general business operation, for example: a
special recreational or entertainment tax payable to the local
municipality for the privilege of operating a golf course). The
representation and warranty contained in this Section 6.1(m) shall not
include income, sales, use, liquor, tobacco, real property, personal
property, value
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added, ad valorem, gross receipts, license tax, business tax, employment
and other similar taxes imposed by governmental agencies.
(n) WATER. To Seller's knowledge, the Real Property has sufficient
water and water rights provided by the municipalities in which the Real
Property is located, or otherwise, as required or necessary to (i)
satisfy the requirements to operate the subject golf courses, and (ii)
irrigate and maintain the subject golf courses in a first class
condition, and all permits and licenses required to use said water have
been obtained by Seller and are transferable to Buyer or Lessee at
Closing.
(o) UTILITIES. To Seller's knowledge, all water, sewer, gas,
electric, telephone and drainage facilities and all other utilities and
public or quasi-public improvements upon or adjacent to the Real
Property required by law or for the normal operation of the Property are
installed, are connected under valid permits, are in good working order,
are adequate to service the Property and are fully paid for, except with
respect to utilities which are in the process of being installed as part
of the ongoing renovation of the clubhouse facility currently in process
at the Real Property. Seller has no knowledge of any fact or condition
which would result in the termination or impairment in the transmitting
of utility services to the Property.
(p) INTENTIONALLY OMITTED.
(q) NO CONFLICT OR VIOLATION. Neither the execution, delivery or
performance of this Agreement by Seller, or any related documents or
instruments, nor the consummation of the transactions contemplated
hereby, nor compliance by Seller with any of the provisions hereof, will
(a) result in a breach of or constitute a default under any material
agreement to which Seller is bound, or (b) violate or conflict with any
provision of the organizational documents of Seller, or (c) violate,
conflict with, or result in a breach of any provision of, or constitute a
default under, or result in the termination or acceleration under, or
result in the creation of any encumbrance upon the Property under, any
material contract, commitment, agreement or other instrument or
obligation to which Seller is a party or by which the Property is bound,
or (d) violate any order, judgment, injunction, award or decree of any
court or arbitration body, or any governmental, administrative or
regulatory authority, or any other body, by or to which Seller or the
Property are or may be bound or subject, or (e) violate, conflict with or
result in a default or breach under, any license, permit or other
governmental authorization (such matter described in this clause (e)
being referred to as a "LICENSE VIOLATION"), which License Violation
would reasonably be expected to have a material adverse affect on the
Property or on Seller's ability to consummate the transactions,
contemplated hereby.
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(r) LABOR MATTERS. Seller is in material compliance with all
applicable laws respecting employment practices, terms and conditions of
employment, management-labor relations and wages and hours which are in
effect as of the date of this Agreement. With respect to the Property,
(i) Seller is not a party to any labor agreement with any labor
organization, (ii) there is no unfair labor practice charge or complaint
against Seller pending or threatened before the National Labor Relations
Board, (iii) there is no labor strike or labor disturbance pending or, to
Seller's knowledge, threatened against Seller nor is any material written
grievance currently being asserted, (iv) Seller has not experienced a work
stoppage or work slowdown at any time during the three (3) years prior to
the Contract Date, and (v) there is, to Seller's knowledge no organization
campaign being conducted and no dispute as to representation of any
employee of Seller. All employment contracts or similar arrangements,
whether written or oral, are of a type that can be effectively terminated
by Seller on or before the expiration or earlier termination of the
Property Lease and, in any event, Buyer shall have no obligations or
liabilities under such employment contracts or similar arrangements at any
time, whether before or after the expiration or termination of the
Property Lease.
(s) ENVIRONMENTAL MATERIALS. Attached as Exhibit G to this
Agreement and incorporated herein by this reference is a list of all
reports, assessments, investigations or audits commissioned by Seller or
within Seller's possession or control relating to the environmental
condition of, or environmental issues concerning, the Real Property
("SELLER'S ENVIRONMENTAL REPORTS"). Seller has heretofore delivered to
Buyer, or shall hereafter deliver to Buyer as part of the Required Due
Diligence Materials to be furnished hereunder, true, correct and complete
copies of the Seller's Environmental Reports. Except as may be disclosed
in Seller's Environmental Reports, and to Seller's knowledge, no
Hazardous Material is or has been used, generated, manufactured,
processed, treated, stored, transported, incinerated, released or
disposed of in, on, under, to or from the Real Property, except in strict
compliance with all applicable Environmental Laws. Except as may be
disclosed in Seller's Environmental Reports, and to Seller's knowledge,
no underground storage tank currently exists or has ever existed in, on
or under the Real Property. Except as may be disclosed in Seller's
Environmental Reports, and to Seller's knowledge, no asbestos containing
material is present within or on the Real Property. Except as may be
disclosed in Seller's Environmental Reports and to Seller's knowledge, no
part of the Real Property has been used for landfill, dumping or other
waste disposal activities or operations, excluding disposal of grass
cuttings, landscape clippings, pruning debris, leaves, vegetation and
similar matters. Seller has not received notice, and, except as
described in Seller's Environmental Reports, Seller has no knowledge, of
any prior owner or occupant of the Real property receiving, any citation,
directive, demand, pleading, complaint, claim, inquiry, notice of
potential responsibility, notice of violation, order, notice of
investigation, or other written communication, actual or threatened, from
any governmental authority, or any person or entity, regarding (a) the
existence of any Hazardous Material in, on, under, or
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migrating to or from, the Real Property in excess of levels permissible
under Environmental Laws; or (b) the potential liability or
responsibility of Seller, or any past or present owner or occupant of the
Real Property, under any Environmental Law. Seller has not submitted
notice under any applicable Environmental Law reporting a release of any
Hazardous Materials into the environment.
(t) BANKRUPTCY. No attachments, execution proceedings, assignments
for the benefit of creditors, insolvency, bankruptcy, reorganization or
other proceedings are pending or, to Seller's knowledge, threatened
against Seller or any members of Seller, nor are any of such proceedings
contemplated by Seller or any members of Seller.
(u) TAXES. Other than as disclosed in the tax bills previously
delivered to Buyer or being delivered to Buyer as part of the Required
Due Diligence Materials, Seller has received no notice that any real
property taxes or special assessments or charges have been levied against
the Property or will result from work, activities or improvements done to
the Property by Seller. Seller has no knowledge and Seller has received
no notice of any intended public improvements which will result in any
new charge being levied against, or in the creation of any new lien upon,
the Property or any portion thereof. Seller has no knowledge and has
received no notice of any intended changes in the assessed valuation of
the Property.
(v) CERTIFICATES OF OCCUPANCY. Seller has received a temporary
certificate of occupancy or other similar certificate permitting lawful
occupancy of the Real Property (i.e., with the permanent certificate of
occupancy expected to be issued following completion of the ongoing
renovation of the clubhouse facility currently in process at the Real
Property) and, to Seller's knowledge, Seller has received all other
approvals of governmental authorities required in connection with the
operation of the Real Property as golf course facilities.
(w) ENCUMBRANCES. The interest of Seller in the Ground Lease, the
Licenses and Permits, the Personal Property, the Trade Names and
Trademarks, the Warranties and the Lessee Property has not been assigned
to any other person, and, to Seller's knowledge, is free and clear of all
encumbrances except for the security interests in the Personal Property
which are reflected on Exhibit E and except for the Loan Documents.
(x) INTENTIONALLY OMITTED.
(aa) EASEMENTS AND RIGHTS OF WAY. Seller has obtained all easements
and rights-of-way, including proof of dedication, required from all
governmental authorities having jurisdiction over the Property or from
private parties necessary for the current use of the Property, to make
use of all utilities serving the Property and to insure vehicular and
pedestrian ingress and egress to and from the Property.
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(bb) BROKERS. Seller has not entered into any agreement or
arrangement, and has no understanding, with any person or entity to pay,
or to obligate Buyer to pay, any finder's fee, brokerage commission or
similar payment in connection with any of the transactions contemplated by
this Agreement.
(cc) WETLANDS AND ENDANGERED SPECIES. Except as described in
Exhibit N attached hereto, and to Seller's knowledge, there are no
portions of the Real Property which constitute (i) "wetlands" under any
applicable, federal, state or local law, ordinance or regulation, or (ii)
habitat for any species which is deemed to be endangered under any
applicable federal, state or local law, ordinance or regulation.
(dd) NO MECHANICS' LIENS. Seller has paid for all material supplied
and services performed with respect to the Property of a type for which a
mechanic's lien may be filed.
(ee) GRAVEYARD. To Seller's knowledge, no portion of the Real
Property is or has been used as a graveyard.
(ff) WASTE DISPOSAL ACTIVITIES. Exhibit L, attached hereto, sets
forth, (i) all waste management activities at the Real Property initiated
or controlled by Seller and, to Seller's knowledge, all waste management
activities at the Real Property initiated or controlled by any other
party, (ii) to Seller's knowledge, all sites to which Seller has directly
or indirectly released, stored, dumped, buried, injected, treated, or
otherwise disposed of, hazardous substances or hazardous waste or other
toxic or hazardous material generated at the Real Property, and (iii) all
parties with whom Seller contracted to do the same.
(gg) SETTLEMENT STATEMENT. The information to be furnished by
Seller in connection with the settlement statement described in Section
11.4 below shall be true, correct and complete in all material respects.
(hh) LOAN DOCUMENTS. Attached as Exhibit Q to this Agreement and
incorporated herein by this reference is a true, correct and complete
schedule of all Loan Documents and all such Loan Documents are in good
standing and in full force and effect.
(ii) LIABILITIES. Except as disclosed in the Due Diligence
Materials delivered by Seller to Buyer, or as otherwise set forth in the
items listed in Exhibits to this Agreement, there are no material
obligations or liabilities which shall be binding upon Buyer or the
Property after Closing.
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(jj) GROUND LEASE. Attached hereto as Exhibit O is a true, correct
and complete description of the Ground Lease. A true, correct and
complete copy of the Ground Lease has heretofore been delivered by Seller
to Buyer. The Ground Lease is valid and in full force and effect, and
has not been amended, modified or supplemented, except as described on
Exhibit O. Seller holds the entire Ground Leasehold Estate, free and
clear of any claims, liens, encumbrances and restrictions of any kind,
other than the Permitted Title Exceptions. Neither Seller nor Ground
Lessor are in default of any of their respective obligations under the
Ground Lease, nor, to the best of Seller's knowledge, has any condition
or event occurred which, with the passage of time, the giving of notice,
or both, would result in such a default under the Ground Lease. The
rents and other charges set forth in the Ground Lease are the actual
rents and charges presently being collected by Ground Lessor. At
Closing, the Ground Lease shall be free and clear of any right or
interest of any real estate broker or any other person and no brokerage
or leasing commission or other compensation will be due or payable to any
person, firm, corporation or other entity with respect to or on account
of the Ground Lease or any extensions or renewals thereof.
(kk) FIRPTA REPRESENTATION. Seller is not a "foreign person" within
the meaning of Section 1445 of the Code.
(ll) TRADE NAMES AND TRADEMARKS. There are no actions or other
judicial or administrative proceedings involving Seller or the Property
pending, or, to Seller's knowledge, threatened, that concern any Trade
Names and Trademarks being transferred to Buyer. To Seller's knowledge,
Seller has the right and authority to use each Trade Name and Trademark
necessary in connection with the operation of the Property in the manner
in which it is currently used, and to convey such right and authority to
Buyer at Closing. To Seller's knowledge, the current use of the Trade
Names and Trademarks does not, and did not in the past, conflict with,
infringe upon or violate any copyright, trade secret, trademark or
registration of any other person. There are no outstanding or, to
Seller's knowledge, threatened disputes or disagreements with respect to
any Trade Name or Trademark or any license, contract, agreement or other
commitment, written or oral, relating to the same.
(mm) COMPLIANCE WITH ERISA. To Seller's knowledge, Seller is not in
default with respect to any of its obligations under any plan, agreement
or trust, and Seller has filed or caused to be filed all reports with
respect to the foregoing required by, and is otherwise in compliance
with, the Employees Retirement Income Security Act of 1974, as amended,
and all rules and regulations thereunder with respect thereto.
(nn) INSURANCE. Seller currently has in place the public liability,
casualty and other insurance coverage with respect to the Property as
Seller reasonably deems necessary. Each of the insurance policies with
respect to the Property is, to Seller's
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knowledge, in full force and effect. All premiums due and payable under
each of the insurance policies with respect to the Property have been
fully paid when due. Seller has not received from any insurance company
any written notices of cancellation or intent to cancel any insurance in
connection with any of the Property.
(oo) NO OTHER AGREEMENTS TO SELL. Seller has not made any agreement
with, and has no obligation (absolute or contingent) to, any person or
firm other than Buyer (a) to sell, transfer or in any way encumber
(except for Permitted Title Exceptions) the Property or (b) to enter into
any agreement with respect to a sale, transfer or encumbrance or put or
call or other purchase option right with respect to the Property.
(pp) LICENSE AGREEMENT. The License Agreement is valid and in full
force and effect. Seller has not received any written notice of default
from the licensor under the License Agreement with respect to any of
Seller's obligations under the License Agreement, nor, to Seller's
knowledge, does any material default exist under the License Agreement
beyond the expiration of any applicable cure periods thereunder, which if
not cured would give the licensor the right to terminate this License
Agreement.
The representations and warranties of Seller contained in this Section 6.1
shall be deemed remade by Seller as of the Closing with the same force and
effect as if made at that time, except to the extent that any such
representation or warranty expressly relates to a specific date, in which case
it shall be true and correct in all material respects as of such specific date.
Seller shall give Buyer written notice of any information that makes any
representation or warranty untrue within five (5) business days of obtaining
such information. The representation and warranty of Seller set forth in
Section 6.1(c), as well as Buyer's right to enforce and/or seek damages for any
breach of the same, shall survive the Closing and continue in full force and
effect indefinitely. All other representations and warranties of Seller set
forth in Section 6.1, as well as Buyer's right to enforce and/or seek damages
for any breach of the same, shall survive the Closing for a period of one (1)
year [(i.e., meaning that Buyer must give notice to Seller of such claim on or
before the first to occur of (A) sixty (60) days after Buyer first becomes
aware thereof, and (B) the four hundred twenty-fifth (425th) day following the
Closing Date (being one year plus sixty (60) days), and if Seller disputes or
fails to satisfy its indemnity obligation therefor, Buyer must commence, and
serve Seller in, a legal action on such claim no later than the five hundred
forty-eighth (548th) day following the Closing Date]. Notwithstanding anything
to the contrary contained in this Section 6.1, (i) Buyer shall have no right to
enforce or seek damages for any breach of representations and warranties unless
the total damage resulting from any such breaches, in the aggregate, exceeds
(in Buyer's good faith determination) Fifty Thousand Dollars ($50,000.00)
(provided that once such threshold amount has been reached, Seller shall be
liable from the first dollar of such damages), and (ii) Seller's maximum
liability for all such breaches shall not exceed the sum of (A) the total value
of the Property, based upon the Units given as consideration, plus (B) the
total value of all other Units received by Seller and/or its affiliates
pursuant to the Other Contribution/Conversion
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Agreements. As used in this Section 6.1, the phrase "to Seller's knowledge"
shall mean the actual knowledge of ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇, the General Manager of Memphis
National Golf Club.
6.2 REPRESENTATIONS AND WARRANTIES OF BUYER. To induce Seller to execute,
deliver and perform this Agreement, Buyer hereby represents and warrants to
Seller on and as of the date hereof and on and as of the Closing Date as
follows:
(a) OTHER REPRESENTATIONS AND WARRANTIES. All representations and
warranties of Buyer appearing in other Sections of this Agreement are
true and correct.
(b) AUTHORITY. Buyer is a duly organized and validly existing
limited partnership in good standing under the laws of the State of
Delaware. Buyer has full capacity, right, power and authority to
execute, deliver and perform this Agreement and all documents to be
executed by Buyer pursuant hereto, and all required action and approvals
therefor have been duly taken and obtained. The individuals signing this
Agreement and all other documents executed or to be executed pursuant
hereto on behalf of Buyer are and shall be duly authorized to sign the
same on Buyer's behalf and to bind Buyer thereto. This Agreement and all
documents to be executed pursuant hereto by Buyer are and shall be
binding upon and enforceable against Buyer in accordance with their
respective terms.
(c) NO CONFLICT OR VIOLATION. Neither the execution, delivery or
performance by Buyer of this Agreement, or any related documents or
instruments, and the consummation of the transaction contemplated hereby,
nor compliance by Buyer of any of the provisions hereof, will: (a)
result in a breach of or constitute a default under any agreement to
which Buyer is bound; (b) violate or conflict with any provision of
Buyer's organization documents; (c) violate, conflict with or result in a
breach of any provision or, or constitute a default under, any contract
or agreement to which Buyer is a party or by or to which Buyer is or may
be bound or subject, or (d) violate any order, judgment, injunction,
award or decree of any court or arbitration body, or any governmental,
administrative or regulatory authority, or any other body, by or to which
Buyer is or may be bound or subject.
(d) APPROVALS. No approval or consent of any foreign or domestic
governmental, administrative or regulatory body or any other person or
entity is required for the execution, delivery or performance by Buyer of
this Agreement, or any related documents or instruments, to which Buyer
is a party.
The representations and warranties of Buyer contained in this Section 6.2
are true, correct and complete in all material respects and shall be deemed
remade by Buyer as of the Closing with the same force and effect as if made at
that time. The representation and warranty
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of Buyer set forth in Section 6.2(b), as well as Seller's right to enforce
and/or seek damages for any breach of the same, shall survive the Closing
indefinitely. All other representations and warranties of Buyer set forth in
Section 6.2 as well as Seller's right to enforce and/or seek damages for any
breach of the same, shall survive the Closing for a period of one (1) year.
Notwithstanding anything to the contrary contained in this Section 6.1, (i)
Seller shall have no right to enforce or seek damages for any breach of
representations and warranties unless the total damage resulting from any such
breaches, in the aggregate, exceeds (in Seller's good faith determination)
Fifty Thousand Dollars ($50,000.00) (provided that once such threshold amount
has been reached, Buyer shall be liable from the first dollar of such damages),
and (ii) Buyer's maximum liability for all such breaches shall not exceed the
total value of the Property, based upon the Units given and cash paid as
consideration.
6.3 CHANGE IN CIRCUMSTANCE. Each party shall notify the other party
promptly if the first party becomes aware of any transaction or occurrence
prior to the Closing Date which would make any of the representations or
warranties of the first party contained in this Agreement not true in any
material respect. Each party shall deliver to the other party at closing a
certificate confirming that its representations and warranties contained in
this Agreement are true and correct in all material respects as of the Closing
Date or, where applicable, describe any change in facts or circumstance that
would make any of the representations or warranties contained in this Agreement
not true in any material respect. It shall be a condition to a party's
obligation to close that no such material change in the other party's
representations and warranties, which would materially and adversely affect
such party, have occurred on or prior to the Closing Date. If any such
material and adverse change has occurred, whether brought to the attention of
such party by the other party's closing certificate or through such party's due
diligence investigation of the Property or otherwise, such party shall have the
right, without limitation on other remedies which may be available to such
party hereunder, to terminate this Agreement by written notice to the other
party; provided, however, that if a material and adverse change has occurred in
a party's representations or warranties as a result of matters outside such
party's reasonable control, the other party's sole remedy, in lieu of any other
legal or equitable remedies, shall be to terminate this Agreement as aforesaid.
ARTICLE 7
SELLER'S COVENANTS
7.1 COVENANTS. Seller covenants and agrees to the following, which
covenants and agreements shall survive Closing, shall have been complied with
as of the Closing Date, and shall not be deemed merged in the conveyance
contemplated herein:
(a) LITIGATION, CLAIMS, OR PROCEEDINGS. In the event a lien, claim,
or cause of action affecting the Property should arise prior to Closing,
Seller shall advise Buyer in writing (or if discovered by Buyer, Buyer
shall advise Seller in writing), and Seller
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shall use commercially reasonable efforts to satisfy or address any such
matter prior to Closing and furnish Buyer with evidence thereof.
Notwithstanding the foregoing, Seller shall have the right to contest any
such claims or causes of action provided that Seller executes and delivers
to the Title Company any undertaking required by the Title Company,
together with any funds required by the Title Company, to cause the Title
Company to insure over such claims or causes of action or to otherwise
protect Buyer and the Real Property from any such claim.
(b) ASSESSMENTS. If any governmental agency or authority gives
notice prior or subsequent to Closing of any improvements, liens,
supplemental tax bills or special assessments made or to be made against
the Real Property or Personal Property which relate to time periods prior
to Closing, Seller shall satisfy and indemnify Buyer from any such claim
and shall furnish Buyer evidence thereof. Notwithstanding the foregoing,
Seller shall have the right to contest any such claims provided that
Seller executes and delivers to the Title Company any undertaking
required by the Title Company, together with any funds required by the
Title Company, to cause the Title Company to insure over such claims or
to otherwise protect Buyer and the Real Property from any such claim.
(c) PERMITS. Seller shall cooperate fully with Buyer as necessary
to enable Buyer, at Buyer's cost, unless otherwise specified herein, to
procure and to maintain all licenses, permits, or authorizations
(including, without limitation, any liquor licenses which are required to
be held in the name of the fee owner or ground lessee of the Real
Property) necessary for the ownership of the Ground Leasehold Estate
and/or other interests in the Real Property or the Improvements
contemplated to be conveyed to Buyer hereunder. Further, Seller shall
fully cooperate with Buyer, at no cost to Seller, in securing all
necessary governmental approvals to transfer to Buyer such licenses,
permits and authorizations.
(d) TAXES. All payroll taxes, sales taxes, license taxes, liquor
taxes, use taxes, and all other obligations arising from and as a result
of the operation of the Real Property and due or to become due to any
governmental or quasi-governmental authority, whether municipal, state,
county, or federal, accruing and relating to any time periods prior to
Closing shall be paid in full by Seller prior to the date on which any
material penalties would attach thereto.
(e) LIENS. From the Contract Date to the Closing Date, Seller shall
not sell, assign, or create any right, title, or interest whatsoever in
or to any of the Property, or create or permit to exist any liens,
encumbrance, or charge thereon, without promptly discharging same prior
to the Closing.
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(f) MECHANIC'S LIEN. Seller shall satisfy or insure over any and
all claims for mechanic's or materialmen's liens for work performed or
materials supplied prior to Closing; provided, however, Seller shall have
the right to contest any such claim so long as a bond is posted by Seller
and other procedures reasonably acceptable to Buyer are followed in order
to protect the Real Property and Personal Property and so long as no
exception therefor appears in the Title Policy.
(g) CONTRACTS. Seller agrees not to enter into any contracts,
commitments, leases, or agreements after the date hereof to which the
Buyer or the Property may be or may become subject without the express
written approval of Buyer, which shall not be unreasonably withheld.
(h) BUSINESS PRACTICES. From the Contract Date to the Closing Date,
Seller shall cause the business operations at the Real Property to be
conducted in the ordinary course consistent with Seller's historical
practices, and Seller shall diligently attempt to cause its golf course
operations to preserve and maintain their goodwill, including
relationships with suppliers, members, and customers consistent with
Seller's historical practices. In addition, Seller shall maintain
financial records and books of account with respect to the Property
consistent with Seller's historical practices and to maintain all
existing insurance on the Property.
(i) VIOLATION OF REPRESENTATIONS. From the Contract Date to the
Closing Date, Seller shall not take any action or omit to take any action
which action or omission would have the effect of violating, in any
material respect, any of the representations, warranties, or covenants of
Seller contained in this Agreement.
(j) CLUB OPERATION RESTRICTIONS. From the Contract Date to the
Closing Date, Seller shall not, without Buyer's prior written consent,
either (i) adopt a new membership program, (ii) modify, or agree to
modify, (A) the total allowable number of members or classes of
memberships in the clubs, or (B) the amount of initiation fees, deposits,
monthly dues or other fees to be charged to members for using the club,
(iii) modify the membership bylaws of any of the golf clubs, (iv) offer,
transfer, or sell any memberships in the clubs for an amount less than
the initiation fees as of the Contract Date, (v) offer memberships
through payment plans which accelerate the amounts which would otherwise
be due prior to the Closing Date or reduce or ▇▇▇▇▇ amounts which would
otherwise be due after the Closing Date (other than, in the case of
clauses (ii), (iv), and (v), in the ordinary course of business
consistent with past practices), or (vi) offer any new membership sales
programs which utilize Buyer's trade names, trademarks or other
identifying symbols or which mentions the sale of the Property
contemplated hereby.
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(k) GOVERNMENTAL INQUIRIES. Seller hereby acknowledges and agrees
that from the Contract Date to the Closing Date or earlier termination of
this Agreement, Buyer may contact any and all federal, state and local
governmental entities, agencies and departments in order to inquire about
and investigate any and all matters relating to the Property. Buyer shall
inform Seller of all such contracts, whether oral or written and shall
furnish Seller with copies of all written inquiries.
(l) MAINTENANCE. From the Contract Date to the Closing Date, Seller
shall, at its sole cost and expense, maintain or cause to be maintained
the Property free from waste and neglect and in good order and repair,
and operate and manage the Property in accordance with Seller's
historical practices, and Seller shall keep and perform or cause to be
performed in all material respects all obligations of Seller under the
Contracts, the Licenses and Permits, the Operating Permits, the
Warranties and under the Legal Requirements. On the Closing Date, Seller
shall tender possession of the Property to Buyer in the same condition
the Property was in as of the Contract Date, except for ordinary wear and
tear, and subject to casualty loss and condemnation.
(m) INSURANCE. From the Contract Date to the Closing Date, Seller
shall maintain or cause to be maintained in full force and effect
liability, casualty and other insurance upon and in respect to the
Property as was being maintained by Seller as of the Contract Date.
(n) OPERATION. From the Contract Date to the Closing Date, and
except as otherwise expressly permitted pursuant to the provisions of
this Agreement, Seller shall operate and manage the Property in material
compliance with all applicable Legal Requirements and in accordance with
Seller's historical management and operation practices; provided that
during said period, without the prior written consent of Buyer, which
shall not be unreasonably withheld, Seller shall not do, suffer or
permit, or agree to do, any of the following:
(i) enter into any transaction in respect to or affecting the
Property which shall be binding upon Buyer or the Property, in any
respect, from and after closing; except that Seller shall be
entitled to enter into Contracts in the ordinary course of business
and to sell memberships without Buyer's consent so long as such
sales are consistent with Seller's existing membership structure
and marketing programs, as disclosed to Buyer during the Due
Diligence Period;
(ii) sell (other than Inventory), encumber or grant any
security interest in the Property or any part thereof in any form
or manner whatsoever, or otherwise perform or permit any act which
will materially diminish or otherwise materially affect Buyer's
interest under this Agreement or in or to the Property or which
will prevent Seller's full performance of its material obligations
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hereunder or which would have the effect of materially breaching
any of Seller's representations or warranties set forth herein;
(iii) enter into, amend, waive any rights under, terminate or
extend any Warranty;
(iv) amend or waive any rights, or suffer or permit a default
to occur under the Ground Lease, any Licenses and Permits,
Operating Permits, Loan Documents or any other document or
instrument affecting the Property; or
(v) remove from the Property any of the Improvements or
fixtures thereon or any of the Personal Property.
(o) GROUND LESSOR CONSENT AND ESTOPPEL. Seller shall deliver to
Buyer, on or before Closing, a consent and estoppel certificate executed
by Ground Lessor substantially in the form and substance as attached
hereto as Exhibit P (herein, the "GROUND LESSOR CONSENT AND ESTOPPEL").
As required by Section 11.2(p) below, the foregoing Ground Lessor Consent
and Estoppel shall be dated no more than twenty (20) days prior to the
Closing Date. Without limitation on any other rights or obligations set
forth herein, the delivery of the Ground Lessor Consent and Estoppel, in
substantially the same form and substance as attached hereto as Exhibit
P, shall, at Buyer's discretion, be a condition precedent to Buyer's
obligations hereunder.
(p) CONSENTS. Seller shall obtain, on or before the Closing Date,
all consents from governmental agencies and other persons or entities
necessary in connection with Seller's performance of its obligations
hereunder. Without limitation of the foregoing, all consents, notices
to, filing or registration with any governmental or regulatory body or
authority, or any other person or entity required to be made or obtained
in connection with the assignment of the Operating Permits to Lessee
shall be made on or before the Closing.
ARTICLE 8
CONDITIONS PRECEDENT
8.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER. Buyer's obligation
to acquire the Property pursuant to this Agreement shall be subject to the
satisfaction, prior to the Closing Date, of all of the following conditions
precedent, each of which is for the benefit of Buyer and may be waived by Buyer
in its sole discretion:
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(a) there shall have been no material damage to the Property since
the Contract Date resulting in costs of repair exceeding the sum of One
Hundred Thousand Dollars ($100,000.00);
(b) there shall have been no notice given to Seller or Buyer, nor
shall Seller or Buyer have any knowledge, of any pending or contemplated
condemnation of any material portion of the Real Property, any impairment
of access to any material portion of the Real Property or any material
violation of any portion of the Property with any Legal Requirement;
(c) all representations and warranties of Seller set forth in the
Agreement shall be true and correct in all material respects as of the
Closing Date, except to the extent such representations or warranties
relate to a specific date, in which case they shall be true and correct
in all material respects as of such specific date.
(d) Seller shall have obtained all consents from, given all notices
to, and made all filings and registrations with, any governmental body or
authority, or any other person or entity, which are required to be
obtained, given or made in connection with the assignment of the
Operating Permits to Lessee;
(e) there shall have been no material adverse change in the
financial condition of the Property or the underlying golf courses and
related operations since the Contract Date;
(f) Seller shall have performed, in all material respects, all of
its covenants and obligations under this Agreement;
(g) All Licenses and Permits and all Operating Permits necessary for
the conduct of business at the Property as currently conducted shall have
been assigned or reissued to either Buyer or Lessee, as appropriate; and
(h) Seller shall have timely executed and delivered to Escrowee all
of the items referred to in Section 11.2 hereof.
8.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER. Seller's
obligation to sell, convey, assign, transfer and deliver the Property to Buyer
pursuant to this Agreement shall be subject to the satisfaction, prior to the
Closing Date, of all of the following conditions precedent, each of which is for
the benefit of Seller and may be waived by Seller in its sole discretion:
(a) all of the representations and warranties of Buyer set forth in
this Agreement shall be true and correct in all material respects as of
the Closing Date,
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except to the extent such representations or warranties relate to a
specific date, in which case they shall be true and correct in all
material respects as of such specific date;
(b) Buyer shall have performed, in all material respects, all of its
covenants and obligations under this Agreement; and
(c) Buyer shall have timely executed and delivered to Escrowee all
of the items referred to in Section 11.3 hereof.
8.3 IPO CONDITION. The obligation of either Seller or Buyer to close the
transaction contemplated hereby is subject to the consummation of the IPO (the
"IPO CONDITION"). Buyer shall have the period beginning on the Contract Date
and ending on September 30, 1998 (the "IPO PERIOD") for satisfaction of the IPO
Condition. Failure of Buyer to consummate the IPO within the IPO Period shall,
without further action of either party, constitute termination of this
Agreement, whereupon neither party shall have any further rights or obligations
hereunder, except for rights and obligations which are expressly provided in
this Agreement to survive such termination.
ARTICLE 9
DESTRUCTION, DAMAGE OR CONDEMNATION
9.1 DESTRUCTION OR DAMAGE. If, subsequent to the Contract Date and on or
before the Closing Date, all or any material portion of the Property shall be
destroyed or damaged by one or more incidents of vandalism, fire, release of
Hazardous Materials or other casualty, whether or not covered by insurance,
Seller shall immediately give Buyer notice of such occurrence, and Buyer,
within fifteen (15) days after receipt of such notice, may elect by written
notice to Seller to (a) terminate this Agreement, in which event this Agreement
shall be deemed null and void and neither party shall have any further rights
and obligations hereunder (subject to Buyer's Indemnity which shall survive
closing for the period specified in Section 5.2), or (b) proceed to close the
transaction contemplated hereby as scheduled (except that if the Closing Date
is less than fifteen (15) days following Buyer's receipt of such notice,
closing shall be delayed until Buyer makes such election), with no adjustment
to the Acquisition Price; provided; however, that Buyer shall have the right to
participate in the adjustment and settlement of any insurance claim relating to
said damage, and Seller shall assign and/or pay to Buyer at closing all
insurance proceeds (and other related choses in action, if any) collected or
claimed with respect to said loss or damage plus any deductible or self-insured
amount. Buyer's failure to give notice within the time period specified above
shall be deemed to be Buyer's election of option (a) above. Notwithstanding
anything to the contrary contained in this Section 9.1, if the cost of
restoring damage to the Property is less than One Hundred Thousand Dollars
($100,000.00), then Buyer shall have no right to terminate this Agreement and
the closing and insurance adjustment procedures described in clause (b) above
shall apply.
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9.2 CONDEMNATION. If, subsequent to the Contract Date and on or before
the Closing Date, any proceeding which shall relate to the proposed taking of
any material portion of the Real Property by condemnation or eminent domain or
any action in the nature of eminent domain, or the taking or closing of any
right of access to the Real Property, is instituted or commenced, Buyer shall
have the right and option to terminate this Agreement by giving Seller written
notice to such effect within fifteen (15) days after receipt of written
notification of any such occurrence or occurrences. Failure to give such notice
within such time shall be conclusive evidence that Buyer has waived the option
to terminate by reason of the occurrence or occurrences of which it has received
notice, the parties shall proceed to close the transaction contemplated hereby
and Buyer shall be credited with or be assigned all Seller's right to any
proceeds therefrom. Seller agrees to furnish Buyer written notification with
respect to any such proceedings within forty-eight (48) hours of Seller's
receipt of any such notification or learning of the institution of such
proceedings. Should Buyer elect to so terminate this Agreement, this Agreement
shall be deemed null and void and neither party shall have any further rights
and obligations hereunder (subject to Buyer's Indemnity which shall survive
closing for the period specified in Section 5.2). If the Closing Date is less
than fifteen (15) days following the last day on which Buyer is entitled to
elect to terminate this Agreement, then the closing shall be delayed until Buyer
makes such election. A taking of a "material" portion of the Real Property
shall be deemed to occur where such taking (i) results in the closing of access
to the Real Property without alternative access being provided, (ii) requires
the relocation of any utility facility, or (iii) would result in restoration
costs in excess of One Hundred Thousand Dollars ($100,000.00).
ARTICLE 10
POSSESSION, PRORATIONS AND CLOSING COSTS
10.1 POSSESSION. Sole and exclusive possession of the Property shall be
delivered to Buyer on the Closing Date, subject only to the rights of parties
under any Permitted Title Exceptions and subject to the terms and conditions of
the Property Lease being entered into at Closing.
10.2 PRORATIONS. It is acknowledged that the Lessee, as lessee under the
Property Lease, shall continue to operate the Property from and after Closing
and, pursuant to said Property Lease, shall be entitled to all revenues
generated from, and shall be obligated to pay all taxes and expenses (including
all rental due under the Ground Lease) relating to, the Property from and after
Closing and during the entire term of the Property Lease (subject, however, to
payment of the various rentals otherwise described in said Property Lease). As
a result of the foregoing, there shall be no proration, at Closing, of any
revenue, tax or expense items hereunder. However, for purposes of determining
"Additional Rent" due and owing under the Property Lease for the year in which
the Closing Date (i.e., the "Commencement Date" under the Property Lease)
occurs, the parties agree as follows:
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(a) All revenue received by Seller that relates to time periods after
the Closing Date, including, but not limited to, deposits, advance
registration and other fees previously received by Seller, rents,
membership dues, initiation fees, prepaid greens fees, coupon book
receipts, gift certificates, discount certificates, locker rentals,
tournament fees, tradeouts, function deposits, and bag storage charges,
shall be deemed "Golf Course Revenue" or "Other Revenue" (as the case may
be) under the Property Lease, attributable to periods following the
Commencement Date of the Property Lease term on an accrual basis in
accordance with generally accepted accounting principles.
(b) All of Seller's receivables, unreceived revenue and deferred
income relating to the operation of the Property prior to the Closing
Date and not otherwise provided for in this Section 10.2 or elsewhere in
this Agreement, shall remain the property of Seller ("SELLER'S
RECEIVABLES") and shall not be deemed "Golf Course Revenue" or "Other
Revenue" under the Property Lease attributable to any period falling
within the term of the Property Lease. It is acknowledged that the
Lessee, as lessee under the Property Lease, shall continue to attempt to
collect Seller's Receivables following the Closing Date. Regardless of
payee designation, all payments received following the Closing Date by
the Lessee, as lessee under the Property Lease, from any club member who
has an outstanding Seller's Receivables shall be presumed to be payments
in respect to the currently due charges, and thereafter to outstanding
Seller's Receivables in the inverse order of maturity.
10.3 CLOSING COSTS. Seller shall be responsible for all title charges and
premiums attributable to the Title Policy (and "▇▇▇▇-up") required to be
delivered by Seller hereunder (i.e., including any additional charges or
premiums for ALTA extended coverage, and the other endorsements described in the
definition of "Title Policy" under Section 1.1 hereof), all charges and fees for
the Surveys, all state, county, local and municipal transfer taxes, all state
deed fees, all recording fees, all documentary fees and taxes, one-half of all
escrow costs, and all other customary "seller" closing charges. Buyer shall be
responsible for all costs incurred in connection with any financing obtained by
Buyer and all other customary "buyer" expenses, including, without limitation,
all engineers', accountants' and other professional fees associated with Buyer's
pre-closing Inspections and one-half of all escrow fees. Buyer and Seller shall
each pay the fees and expenses of their respective legal counsel incurred in
connection with the transaction contemplated hereby.
ARTICLE 11
CLOSING
11.1 TIME AND PLACE. The closing of the transaction contemplated hereby
("CLOSING") shall take place at the offices of Buyer's attorney on a date (the
"CLOSING DATE") to be specified by written notice from Buyer to Seller, such
date to be not later than ten (10) business days
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following the expiration of the IPO Period. The Closing shall be effected
pursuant to the escrow instructions described in Section 3.5 above. Unless the
parties otherwise agree, it is contemplated that the Closing shall take place
concurrently with or following the consummation of the IPO, as more fully
described in Section 8.3 above.
11.2 SELLER'S DELIVERIES. On or before the Closing Date, Seller shall
deliver or cause to be delivered to Buyer or to Escrowee the following
documents, each of which shall be in form and substance reasonably acceptable
to Buyer:
(a) The Deed and the Assignment (which Assignment shall contain
Seller's indemnification, in favor of Buyer, whereby Seller shall
indemnify, defend and hold Buyer harmless from and against any and all
obligations of Seller arising or accruing under the Ground Lease prior to
Closing);
(b) Two (2) counterpart originals of Seller's assignment of the
Licenses and Permits and Warranties, substantially in the form attached
as Exhibit I hereto (the "ASSIGNMENT OF LICENSES, PERMITS AND
WARRANTIES"), executed by Seller;
(c) Seller's ▇▇▇▇ of sale assigning and conveying the Personal
Property and the Trade Names and Trademarks substantially in the form
attached as Exhibit J hereto, executed by Seller;
(d) Two (2) counterpart originals of the Property Lease, executed by
Lessee, as sublessee thereunder;
(e) Originals of the Ground Lease and of all Licenses and Permits
and Warranties assigned to Buyer (or where originals are unavailable,
copies duly certified by Seller as being true, correct and complete
copies of the originals);
(f) Copies of all Loan Documents, Membership Agreements, Contracts
and Operating Permits duly certified by Seller as being true, correct and
complete;
(g) Seller's certificate dated as of the Closing Date confirming the
representations and warranties of Seller under Section 6.1 hereof and, if
applicable, describing any change in facts or circumstances which would
make any of such representations or warranties untrue as of the Closing
Date;
(h) Such evidence as may be reasonably satisfactory to Buyer
evidencing the due authorization, execution and delivery of this
Agreement and the other documents to be executed in connection herewith
by Seller;
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(i) An ALTA Statement or other affidavit in form required by the
Title Company in order to issue the Title Policy required hereunder;
(j) An executed Affidavit in customary form, or a qualifying
statement from the U.S. Treasury Department that the transaction is
exempt from the withholding tax requirement imposed by Section 1445A of
the Internal Revenue Code and the rules and regulations promulgated
thereunder ("SECTION 1445A");
(k) All keys and pass-cards to the Improvements and all Personal
Property;
(l) The Title Policy (or a "marked-up" title commitment as described
in Section 4.1 above);
(m) Any required state, county and municipal transfer declarations;
(n) As required under Article 17 of this Agreement, documents
evidencing the indemnification and release of Seller with respect to
liability under any applicable Bulk Sales Law;
(o) A payoff letter from each lender under the Loan Documents
stating the amount necessary to satisfy, in full, the indebtedness
evidenced and/or secured by the Loan Documents as of the Closing Date,
together with full and complete recordable releases of all liens created
by such Loan Documents which are in effect as of the Closing Date (it
being understood and agreed, however, that the conveyance of the Property
contemplated hereby shall be subject to such Loan Documents and the
indebtedness evidenced and/or secured thereby and the Debt Subject to
Amount shall be paid from funds deposited by Buyer which are in addition
to the Acquisition Price);
(p) the original Ground Lessor Consent and Estoppel, executed by
Ground Lessor and dated no more than twenty (20) days prior to the
Closing Date;
(q) Such other documents, instruments, certifications and
confirmations as may be necessary or appropriate to comply with the
provisions of this Agreement or as may be reasonably required and
designated by Title Company to fully effect and consummate the
transactions contemplated hereby;
(r) Such funds as may be required, in addition to funds deposited by
Buyer to (i) discharge all deeds of trusts, mortgages, mechanic's liens,
judgment liens, security interests or encumbrances against the Property
securing any indebtedness or obligations (other than the Permitted Title
Exceptions and the liens created by the Loan Documents), and (b) pay any
amounts required to be paid by Seller in accordance with the provisions
of Article 10; and
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(s) Such other documents and instruments as may be reasonably
requested by the underwriters or their counsel to comply with federal and
state securities law requirements with respect to the issuance of the
Units and/or Common Stock as part of the IPO.
11.3 BUYER'S DELIVERIES. On or before the Closing Date, Buyer shall
deliver or cause to be delivered to Seller or to Escrowee the following
documents, each of which shall be in form and substance reasonably acceptable
to Seller:
(a) Two (2) counterpart originals of the Assignment of Licenses,
Permits and Warranties, executed by Buyer;
(b) Two (2) counterpart originals of the Property Lease, executed by
Buyer as sublessor;
(c) An ALTA statement or other affidavit in form required by the
Title Company in order to issue the Title Policy required hereunder;
(d) Buyer's certificate dated as of the Closing Date confirming the
representations and warranties of Buyer under Section 6.2 hereof and, if
applicable, describing any change in facts or circumstances which would
make any of such representations or warranties untrue as of the Closing
Date;
(e) The Acquisition Price consideration required hereunder plus
funds sufficient to pay the Debt Subject to Amount;
(f) Any required state, county and municipal transfer declarations;
(g) Such other documents, instrument, certifications and
confirmations as may be necessary or appropriate to comply with the
provisions of this Agreement or as may be reasonably required and
designated by Title Company to fully effect and consummate the
transactions contemplated hereby; and
(h) Funds sufficient to pay all amounts required to be paid by Buyer
in accordance with the provisions of Article 10.
11.4 CONCURRENT DELIVERIES. Seller and Buyer shall jointly deposit in the
escrow or deliver to each other at or before Closing an agreed settlement
statement duly executed by the respective parties.
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11.5 CONCURRENT TRANSACTIONS. All documents or other deliveries required
to be made by Buyer or Seller at Closing, and all transactions required to be
consummated concurrently with all other transactions and all other deliveries,
and no delivery shall be deemed to have been made, and no transaction shall be
deemed to have been consummated, until all deliveries required by Buyer, or its
nominee, and Seller shall have been made, and all concurrent or other
transactions shall have been consummated.
11.6 NEW YORK STYLE CLOSING. At the request of either party, the
transaction shall be closed by means of a so-called "New York Style Closing,"
with the concurrent delivery of documents of title, transfer of interest,
delivery of the Title Policy (or "marked-up" title commitment as described
herein) and payment of the Acquisition Price. Seller shall provide any
undertaking to the Title Company necessary for the New York Style Closing to
occur.
11.7 EMPLOYEES AND LEASING COMMISSIONS. Seller's employees shall be the
sole responsibility and expense of the Seller. Seller agrees that Buyer shall
have no responsibility for any unpaid leasing fee or commission is due any
party in connection with any Contract and that Seller will not look to Buyer for
any payment for services, commissions or fees in connection with the operation
of the Property performed or incurred prior to the Closing Date. Seller shall
indemnify, defend and hold Buyer harmless from and against any and all damages,
liabilities, costs and expenses (including attorneys' fees and other litigation
expense) arising from any claim by any person for any leasing fee or commission
in connection with any Contract, or any claim by any employee employed by Seller
in the operation of the Property.
11.8 LOAN PAYOFF. Seller and Buyer shall direct Escrowee (i) to pay all
of the loan evidenced and/or secured by the Loan Documents, in accordance with
the payoff letter(s) deposited by Seller, with the funds deposited by Buyer
pursuant to Section 11.3(e) above, and (ii) to satisfy or remove from the Title
Policy the lien of the Loan Documents.
ARTICLE 12
INDEMNIFICATION
12.1 SELLER'S INDEMNITY. Seller hereby agrees to indemnify, defend and
hold harmless Buyer, and its partners, members, officers, shareholders,
directors, employees and agents (collectively, the "BUYER INDEMNIFIED PARTIES")
from and against any and all losses, liabilities, fines and penalties and
damages (including, without limitation, any damages or injury to persons,
property or the environment as provided hereunder), or actions or claims in
respect thereof (including, without limitation, amounts paid in settlement and
reasonable cost of investigation, reasonable attorneys' fees and other legal
expenses), resulting from third party claims (based upon the allegations set
forth in such claims and whether or not ultimately successful) to which Buyer
and/or the other Buyer Indemnified Parties may become subject or which Buyer
and/or
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the other Buyer Indemnified Parties may suffer or incur, either directly or
indirectly, insofar as such losses, liabilities or damages (or actions or
claims in respect thereof) arise out of, are with respect to, or are based
upon:
(i) Seller's breach of any representation or warranty set
forth in this Agreement;
(ii) Seller's default in the performance of any of Seller's
covenants set forth in this Agreement;
(iii) Seller's failure to satisfy and discharge any and all
obligations of Seller under the Ground Lease, the Loan Documents or
any Contracts to which Seller is bound which obligations relate to
any time period prior to the Closing;
(iv) Seller's failure to fully satisfy and discharge any and
all obligations of Seller regarding any current or former employees
of Seller including, without limitation, any obligations of Seller
for the payment of wages, salaries, benefits and other
compensation;
(v) Any obligations, liabilities or charges of Seller not
expressly assumed by Buyer; or
(vi) The operation and management of the Property (including
any liabilities incurred with respect thereto) at any time on or
prior to the Closing Date.
12.2 BUYER'S INDEMNITY. Buyer hereby agrees to indemnify, defend and hold
Seller and the other Seller Indemnified Parties harmless from and against any
and all losses, liabilities, fines and penalties and damages (including,
without limitation, any damages or injury to persons, property or the
environment as provided hereunder), or actions or claims with respect thereto,
except for liabilities specifically assumed or retained by Seller pursuant to
the terms of this Agreement (including, without limitation, amounts paid in
settlement and reasonable costs of investigation, reasonable attorneys' fees
and other legal expenses) resulting from third party claims (based upon the
allegations set forth in such claims whether or not ultimately successful) to
which Seller and/or the other Seller Indemnified Parties may become subject or
which Seller and/or the other Seller Indemnified Parties may suffer or incur,
either directly or indirectly, insofar as such losses, liabilities or damages
(or actions or claims in respect thereof) arise out of, are with respect to, or
are based upon:
(i) Buyer's breach of any representation or warranty set forth
in this Agreement or a breach of any covenant of Buyer contained
herein;
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(ii) any obligations, liabilities or charges of Seller that
are expressly assumed by Buyer and that are not the Lessee's
obligations, liabilities or charges under the Property Lease; or
(iii) the operation and management of the Property (including
any liabilities incurred with respect thereto) at any time after
the Closing Date.
12.3 INDEMNIFICATION CLAIMS.
(a) Any claim for indemnification under this Agreement must be
asserted in writing by the Seller Indemnified Party or the Buyer
Indemnified Party, as the case may be, stating the nature of the losses
and the basis for the indemnification therefor within one (1) year from
the Closing Date [(i.e., meaning that the Seller Indemnified Party or the
Buyer Indemnified Party, as the case may be, must give a detailed notice
to the indemnifying party hereunder of such claim on or before the first
to occur of (A) sixty (60) days after the Seller Indemnified Party or the
Buyer Indemnified Party, as the case may be, first becomes aware of the
matter giving rise to such claim for indemnification, and (B) the four
hundred twenty-fifth (425th) day following the Closing Date (being one
year plus sixty (60) days) and if the indemnifying party hereunder
disputes or fails to satisfy its indemnity obligation therefor, the
Seller Indemnified Party or the Buyer Indemnified Party, as the case may
be, must commence, and serve the indemnifying party hereunder in, a legal
action on such claim no later than the five hundred forty-eighth (548th)
day following the Closing Date]; provided, however, that the foregoing
shall not limit any survival period hereunder which expressly exceeds one
(1) year.
(b) As soon as reasonably practicable after receipt by the party
seeking indemnification of notice of any liability or claim incurred by
or asserted against such party that is subject to indemnification under
this Agreement, the Seller Indemnified Party or Buyer Indemnified Party,
as the case may be, shall give notice thereof to the applicable
indemnifying party (i.e., Seller or Buyer, as the case may be), including
liabilities or claims to be applied against the indemnification threshold
established pursuant to this Section. The Seller Indemnified Party or
the Buyer Indemnified Party, as the case may be, may at its option demand
indemnity under this Section as soon as a claim has been threatened by a
third party, regardless of whether any actual losses have been suffered,
so long as such indemnified party shall in good faith determine that such
claim is not frivolous and that the indemnified party may be liable for,
or otherwise incur, losses as a result thereof and shall give notice of
such determination to the indemnifying party. The indemnified party
shall permit the indemnifying party, at its option and expense, to assume
the defense of any such claim by counsel selected by the indemnifying
party and reasonably satisfactory to the indemnified party, and to settle
or otherwise dispose of the same; provided, however, that the indemnified
party may at all times participate in such defense at its expense; and
provided further, however, that the
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indemnifying party shall not, in defense of any such claim, except with
the prior written consent of the indemnified party in its sole and
absolute discretion, consent to the entry of any judgment or enter into
any settlement that does not include as an unconditional term thereof the
giving by the claimant or plaintiff in question to the indemnified party
and its affiliates a release of all liabilities in respect of such
claims, or that does not result only in the payment of money damages
(which money damages shall thereafter be paid by the indemnifying party
hereunder). If the indemnifying party shall fail to undertake such
defense within thirty (30) days after such notice, or within such shorter
time as may be reasonable under the circumstances, then the indemnified
party shall have the right to undertake the defense, compromise or
settlement of such liability or claim on behalf of and for the account of
the indemnifying party.
12.4 LIMITATION. Notwithstanding anything to the contrary contained in
this Article 12, Seller's maximum liability for all indemnification obligations
under Section 12.1 above shall not exceed the sum of (a) the total value of the
Property, based upon the Units given as consideration, plus (b) the total value
of all other Units received by Seller and/or its affiliates pursuant to the
Other Contribution/Conversion Agreements.
ARTICLE 13
DEFAULT
13.1 BUYER DEFAULT. Notwithstanding anything to the contrary contained in
this Agreement, if (a) Buyer has not terminated this Agreement in accordance
with its terms prior to the expiration of the Contingency Period; (b) the sale
of the Property to Buyer is not consummated due to Buyer's failure to perform
any act required of Buyer hereunder, and (c) all of the conditions precedent to
Buyer's obligation to close have been satisfied or waived by Buyer, then Seller
shall execute and deliver to Buyer written notice of such breach, which notice
shall set forth complete information above the nature of the breach. Buyer
shall have a period of three (3) business days to cure such breach. If such
breach remains uncured beyond the three (3) business day period described
above, then, as Seller's sole and exclusive remedy in lieu of all other legal
or equitable remedies shall be either: (i) to cancel this Agreement, in which
event Seller shall have the right to recover from Buyer all of Seller's actual,
reasonable out-of-pocket third party costs, fees and expenses incurred in
connection with this transaction, or (ii) to specifically enforce the
provisions of this Agreement. Nothing herein shall be deemed to limit, in any
manner, Buyer's indemnity obligations described in Section 12.2 hereof.
13.2 SELLER DEFAULT. Notwithstanding anything to the contrary contained
in this Agreement, if Seller fails to perform any act required of Seller
hereunder, or otherwise is in breach of any of its representations or
warranties hereunder, then Buyer shall execute and deliver to Seller written
notice of such default or breach, which notice shall set forth complete
information about the nature of the default or breach. Seller shall have a
period of three (3)
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business days to cure such default or breach. If such default or breach
remains uncured beyond the three (3) business day period described above, then
Buyer's sole and exclusive remedy, in lieu of any and all other remedies at law
or in equity shall be either: (i) to cancel this Agreement, in which event
Buyer shall have the right to recover from Seller all of Buyer's actual,
reasonable out-of-pocket third party costs, fees and expenses incurred in
connection with this transaction, or (ii) to specifically enforce the
provisions of this Agreement. Nothing herein shall be deemed to limit, in any
manner, Seller's indemnity obligations described in Section 12.1 hereof.
ARTICLE 14
BROKERAGE
14.1 BROKERAGE. Seller hereby represents and warrants to Buyer that
Seller has not dealt with any broker or finder with respect to the transaction
contemplated hereby and Seller hereby agrees to indemnify, defend and hold
harmless Buyer for any claim for brokerage commission or finder's fee asserted
by any person, firm or corporation claiming to have been engaged by Seller.
Buyer hereby represents and warrants to Seller that Buyer has not dealt with
any broker or finder in respect to the transaction contemplated hereby and
Buyer hereby agrees to indemnify, defend and hold harmless Seller for any claim
for brokerage commission or finder's fee asserted by a person, firm or
corporation claiming to have been engaged by Buyer.
ARTICLE 15
NOTICES
15.1 NOTICES. Any notice, request, demand, instruction or other document
to be given or served hereunder or under any document or instrument executed
pursuant hereto shall be in writing and shall be delivered personally, or
transmitted by facsimile (provided that the original thereof together with the
facsimile confirmation sheet shall thereafter be promptly sent by regular
United States Mail), or sent by United States registered or certified mail,
return receipt requested, or sent by overnight express courier, postage
prepaid, and shall be addressed to the parties at their respective addresses
set forth below, and the same shall be effective upon receipt if delivered
personally, or two (2) business days after deposit in the mails, if mailed as
aforesaid, or one (1) business day after deposit with an overnight express
courier, or immediately upon being sent by facsimile transmission. A party may
change its address for receipt of notices by service of a notice of such change
in accordance herewith.
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If to Buyer: APGM Limited Partnership
c/o ▇▇▇▇▇▇ ▇▇▇▇▇▇ Golf Management LLC
▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Presidio Main Post, ▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: 415/561-4680
with a copy to: ▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: 312/630-5321
If to Seller: ▇▇▇▇▇▇ ▇▇▇▇▇▇ Golf Management LLC
▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Presidio Main Post, ▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: 415/561-4680
ARTICLE 16
ADDITIONAL COVENANTS
16.1 ENTIRE AGREEMENT, AMENDMENTS AND WAIVERS. This Agreement, together
with the Property Lease, contains the entire agreement and understanding of the
parties with respect to the subject matter hereof, and the same may not be
amended, modified or discharged nor may any of its terms be waived except by an
instrument in writing signed by the party to be bound thereby.
16.2 FURTHER ASSURANCES. The parties each agree to do, execute,
acknowledge and deliver all such further acts, instruments and assurances and
to take all such further action before or after the closing as shall be
necessary or desirable to fully carry out this Agreement and to fully
consummate and effect the transactions contemplated hereby.
16.3 SURVIVAL AND BENEFIT. All agreements, obligations and indemnities of
the parties shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Except as otherwise expressly set forth
herein, all representations, warranties and indemnities shall survive Closing
for a period of one (1) year.
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16.4 NO THIRD PARTY BENEFITS. This Agreement is for the sole and
exclusive benefit of the parties hereto and their respective successors and
assigns, and no third party is intended to or shall have any rights hereunder.
16.5 BUYER'S INVESTIGATION AND INSPECTIONS. Any investigation or
inspection conducted by Buyer, or any agent or representative of Buyer,
pursuant to this Agreement, in order to verify independently Seller's
satisfaction of any conditions precedent to Buyer's obligations hereunder or to
determine whether Seller's warranties are true and accurate, shall not affect,
or constitute a waiver by Buyer of, any of Seller's obligations hereunder or
Buyer's reliance thereon.
16.6 INTERPRETATION. The headings and captions herein are inserted for
convenient reference only and the same shall not limit or construe the
paragraphs or Sections to which they apply or otherwise affect the
interpretation hereof. This Agreement and any document or instrument executed
pursuant hereto may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument. Whenever under the terms of this Agreement the time for
performance of a covenant or condition falls upon a Saturday, Sunday or holiday,
such time for performance shall be extended to the next business day. Otherwise
all references herein to "DAYS" shall mean calendar days. Time is of the
essence of this Agreement.
16.7 GOVERNING LAW. With respect to general issues regarding enforcement
of this Agreement, this Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois. With respect to specific
issues relating to the particular golf course property, the laws of the State
where the Real Property is located shall govern and control.
16.8 ATTORNEYS' FEES. In any action or proceeding involving this
Agreement or the contents hereof, the prevailing party shall be entitled to
recover from the other party the prevailing party's reasonable costs and
expenses in such action or proceeding, including reasonable attorneys' fees.
16.9 ASSIGNMENT. Seller shall not have the right to assign this
Agreement, or any interest herein, to any other person or entity, without first
having obtained the prior written consent of Buyer (which consent may be
withheld at Buyer's sole and exclusive discretion). Buyer shall have the right
to assign this Agreement, or any interest herein, to any other party, provided
that in such instance the assignee shall assume all of the rights and
obligations of Buyer hereunder, and provided that the original named Buyer
shall continue to be responsible for all of "Buyer's" obligations hereunder.
Buyer shall have the right to designate a nominee, at closing, to which title
to the Property (or any portion thereof) shall be conveyed, marked as attached.
16.10 INTENTIONALLY OMITTED.
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16.11 OFFER AND ACCEPTANCE. Delivery by Buyer to Seller of a copy of this
Agreement executed by Buyer shall constitute an offer to purchase the Property
upon the terms and conditions herein set forth which shall be effective for a
period of seventy-two (72) hours following the time of such delivery. If
Seller fails to deliver a fully executed counterpart of this Agreement to Buyer
prior to expiration of such seventy-two (72) hour period, then at Buyer's sole
option, said offer may be revoked and rescinded in its entirety at any time
thereafter, and upon such revocation and rescission, said offer and this
Agreement shall have no further force or effect.
ARTICLE 17
COMPLIANCE WITH BULK SALES ACTS
17.1 Each party hereto waives compliance with the requirements of any and
all bulk sales regulations of any of the applicable jurisdictions in which the
Property is located (the "BULK SALES LAWS"). Notwithstanding the foregoing,
Seller shall indemnify, defend and hold harmless Buyer and Buyer's constituent
partners from and against any and all costs, expenses, damages, fines,
penalties, claims, suits or proceedings arising under any and all applicable
Bulk Sales Laws by reason of the transactions hereunder (which indemnity shall
expressly survive the Closing of this transaction hereunder for the longest
period permitted by applicable law and which indemnity shall not be subject to
any limitations on Buyer's ability to make claims or to seek recovery as may
otherwise be provided hereunder).
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
BUYER:
APGM LIMITED PARTNERSHIP, a
Delaware limited partnership
By: ▇▇▇▇▇▇ MANAGEMENT, LLC, a
Delaware limited liability company,
its general partner
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇ GOLF MANAGEMENT LLC,
a Delaware limited liability company,
its managing member
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: CFO, Secretary & Treasurer
SELLER:
▇▇▇▇▇▇ ▇▇▇▇▇▇ GOLF MANAGEMENT LLC,
a Delaware limited liability company
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
Its: President
--------------------------------------------
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